Insurance companies Cigna Life and OnePath Life are paying $180,000 dollars to the Financial Markets Authority (FMA) for allowing misleading representations to be made about their credit card insurance policies by ANZ Bank.
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The pair admitted to breaching the Financial Markets Conduct Act and reached a settlement with the FMA, after the issue came to light during the financial watchdog's review of life insurance industry.
The breaches related to misleading claims made by their agent, ANZ, who charged 307 customers for credit card insurance policies that offered no cover or benefit between 2014 and 2019.
ANZ was subsequently taken to court by the FMA and was ordered to pay a penalty of $280,000 in March 2021.
Although OnePath and Cigna did not directly make any misleading representations, the FMA said they should be held accountable for not having greater oversight of their products when they were being sold by ANZ.
"OnePath and Cigna received regular information from ANZ about their 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," FMA general counsel Liam Mason said.
"This enforceable undertaking send 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 will jointly pay the $180,000 to the FMA in lieu of a pecuniary penalty.
In reaching the settlement, Cigna said it had a "commitment to developing and maintaining policies, systems, and processes to support good consumer outcomes and to prevent issues of the kind referred to in these undertakings from occurring in the future".
OnePath was acquired by Cigna in 2018 and exited the insurance industry in 2020, so did not offer a similar commitment.