Media Release
MR No. 2022 – 41
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko has filed High Court proceedings against Vero Insurance New Zealand Limited for failing to apply multi-policy discounts, which led to affected customers being overcharged approximately $8.7 million in premiums.
The FMA claims Vero contravened the fair dealing provisions of the Financial Markets Conduct (FMC) Act by incorrectly stating the premiums owed by customers who were entitled to the discounts. The false and/or misleading statements were made in periodic invoices issued to affected customers in relation to house and contents, vehicle and boat insurance. Multi-policy discounts apply when a customer has more than one risk or cover insured under one policy, or under multiple policies.
The FMA alleges between April 2014 and May 2022¹ Vero and its intermediaries issued the invoices to approximately 47,000 affected customers and effectively overcharged $8.7 million in premiums as a result of the issue.
The FMA claims Vero failed to apply the discounts due to errors and deficiencies in its systems, including data entry errors by Vero employees and some intermediaries (which sold the policies on behalf of Vero). The FMA alleges that liability primarily rests with Vero as it designed, owned and maintained the systems at fault.
Vero reported the issue to the FMA in December 2019, at which time its remediation programme had been underway for some months. However, Vero had not fully reviewed all affected intermediary channels, so the FMA requested the insurer to undertake a full investigation and remediation plan. Vero subsequently discovered an even greater number of affected customers.
The FMA understands Vero has reimbursed $10,259,000 in overcharges to affected policyholders.
Margot Gatland, FMA Head of Enforcement, said: “The scale of customer harm caused by Vero’s system failures is significant and we consider Vero was slow to investigate the issue, despite even being pressured at one point by one of its intermediaries. Vero was aware from 2010 that there were issues with its systems but failed to adequately recognise their magnitude.
“Vero’s systems were open to manual error and it had no audit system to pick up these errors. By filing this case, we are sending a strong message that financial services firms must invest in robust systems and controls.”
The FMA acknowledges that Vero has been cooperative with the regulator through its investigation since disclosing the issue.
The FMA is seeking a declaration that Vero contravened the FMC Act and a pecuniary penalty. The proceedings were filed in the Auckland High Court.
Vero is part of the Suncorp Group.
ENDS
¹ The issue dates back to 2009 but the FMA’s claim only applies to Vero’s conduct from April 2014 onwards, which is the date the FMC Act came into force.
Media contacts:
Andrew Park
FMA Media Relations Manager
[email protected]
021 220 6770
Campbell Gibson
FMA Senior Adviser, Media Relations
[email protected]
021 945 323
