MR No. 2022 – 14
OnePath Life (NZ) Limited and Cigna Life Insurance New Zealand Limited will jointly pay $180,000 to the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko after admitting liability for breaching the fair dealing provisions of the Financial Markets Conduct Act 2013 (FMCA).
The breaches relate to misleading representations made by ANZ when preparing account statements on behalf of OnePath and Cigna for some credit card repayment insurance (CCRI) customers.
OnePath and Cigna were the insurers for many of the CCRI policies for which ANZ was ordered by the High Court to pay a $280,000 civil pecuniary penalty in 2021 for making misleading representations to 307 customers, following a case brought by the FMA. ANZ was the distributor for the sale and invoicing of the affected CCRI insurance policies. The issues in the High Court proceeding related to duplicate CCRI policies or CCRI policies that offered no cover or benefit to customers.
OnePath and Cigna notified the FMA of the issues during the Life Insurance Culture & Conduct Review. The FMA determined that OnePath and Cigna should be held to account for their respective roles as the insurers of many affected policies in the ANZ CCRI case because the companies should have had better oversight of their products when they were being sold and administered by ANZ.
Although OnePath and Cigna did not directly make any misleading representations to their customers, they admitted liability for the misleading representations made by ANZ (as their agent) under section 536 of the FMCA, a provision which can deem product and services providers to be liable for the conduct of their agents in certain circumstances.
OnePath and Cigna have jointly offered an enforceable undertaking to the FMA, which the regulator has accepted and involves the companies paying $180,000 to the FMA in lieu of a pecuniary penalty. In offering the undertaking, Cigna recorded its:
“…commitment to developing and maintaining effective policies, systems, and processes to support good customer outcomes and to prevent issues of the kind referred to in these Undertakings from occurring in the future.”
OnePath is no longer a licensed insurer so it did not offer a similar commitment, having been acquired by Cigna and voluntarily exited the insurance industry in January 2020.
Liam Mason, FMA General Counsel, said: “This enforceable undertaking sends a message to the industry that product providers, underwriters, distributors, and intermediaries have a shared responsibility for ensuring customers are treated fairly and receive good outcomes for the products and services they receive”.
“OnePath and Cigna received regular information from ANZ about the affected policies and should have had systems and controls to identify the issues and taken steps to ensure that their distributor was delivering their policies correctly.”
Background: FMA v ANZ proceedings
The FMA proceedings contained two causes of action. Firstly, that ANZ issued duplicate CCRI policies to some customers, which provided no additional benefits or cover, and charged premiums on those policies, during the period April 2014 - November 2019. Secondly, ANZ issued and failed to cancel CCRI policies for ineligible customers, also charging premiums on those policies, during the period 1 April 2014 – May 2018. While the two also affect some policies sold by ANZ prior to April 2014 and hence affected some other ANZ customers, the FMA’s claim solely related to 307 policies that were subject to charges after April 2014, reflecting the date when Part 2 of the FMCA came into force.