Banks, life insurers refund about $150m to more than 1.5 million consumers

Banks and life insurers have refunded about $150 million to more than 1.5 million consumers for unfair and improper treatment and poor service.

The Financial Markets Authority (FMA) and the Reserve Bank (RBNZ) required firms in 2018/19 to go back through their dealings, report mistakes, misdealing, and to rectify them.

FMA banking and insurance director Claire Bolingford said the review had revealed weak systems and processes, and the need for changes in attitudes to dealing with customers.

"We note that over the past 12 months boards have displayed a greater understanding of what needs to occur to achieve consistent fair customer treatment."

The sector had done much work going back through several years of business to identify issues needing to be fixed and consumers needing to be compensated, Bolingford said, adding she expected there would be more self-reporting.

"The more firms have looked, the more problems they've found. You can reasonably expect our future monitoring activities to consider how well firms have completed, and reported on, these matters."

Banks had identified 266 issues being remediated involving 952,000 customers with a total of $109m returned to customers.

Insurance companies had paid back $43m to half a million customers so far.

Among the issues uncovered have been charges for services that were never delivered, selling financial products such as insurance that did not do what they were represented as doing or being of no value at all mistakes in fees for cards and services or making misleading statements to customers.

Bolingford said the crackdown on banks and insurers should have helped them improve their systems and get prepared for new legal obligations on the treatment of customers in the Conduct of Financial Institutions Regime, which comes into force next July.

"Firms will be in a better position to demonstrate how they are treating customers fairly through their fair conduct programmes."