ASB fined $2.1 million at High Court, consultant raised red flags about overcharging 61 times
Thursday, 5 March 2026
ASB Bank has been fined $2.1 million at the High Court in Auckland in a case that revealed the bank sat on the knowledge that it was overcharging tens of thousands of its insurance customers for years without fixing it.
From February 2009, ASB failed to apply multi-policy discounts to thousands of customers who had taken out more than one house, car and contents insurance policy through the bank’s partnership with the country’s largest insurer IAG.
But despite being told of the systemic errors in 2013 by a banking consultant working in ASB’s Wealth and Protection Team, nothing was done until the Financial Markets Authority and Reserve Bank demanded banks and insurers investigate, and confess to any systemic failures in their operations.
In her penalty judgement, Justice Laura O’Gorman recorded ASB’s long failure to take action after the consultant repeatedly raised red flags that the bank’s staff were not taking the time to provide customers with their correct multi-policy discounts.
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The consultant was instead told to “reduce” his reporting of the issue.
“That same consultant raised the issue 61 times to his direct line manager,” O’Gorman said. “Those emails were forwarded to the sales teams in ASB and in IAG, but the problem was not escalated to management.
“Ultimately the banking consultant recorded that he was requested to reduce his reporting of the issue. Between July 2013 and June 2016, the multi-policy discount issue was considered from time to time by employees with various levels of managerial responsibility, but no steps were taken to investigate more fully or put systems in place to identify and manage errors,” O’Gorman said.
“In March 2019, it was proposed that the issues be investigated in the wake of the ‘recent Australian Royal Commission on banking’,” O’Gorman said.
That was a reference to the joint FMA/Reserve Bank demands in response to the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2017 and 2018 in which the Australian parents of New Zealand’s big four banks and two largest insurers were criticised.
But even then, ASB moved slowly.
“No investigation was undertaken by IAG or ASB until June 2021, when a staff member raised the issue with ASB’s Retail Risk Team,” O’Gorman said.
And, she recorded: “When ASB notified the FMA of the multi-policy discount issue, it initially said it was first identified in June 2021, which understated the full history.”
The FMA, which took the case against ASB, told the court: “ASB was not only on notice of these issues for years, but nothing was done to escalate, investigate or remedy the issues.”
The regulator said a bank of ASB’s size and resources ought to have had more robust systems in place to prevent and detect errors.
ASB “largely” accepted the criticisms, but said its conduct was “entirely unintentional and not pursued for financial gain”.
There was also a slow response from the bank to a second overcharging issue relating to fees on business accounts, O’Gorman found.
In that case, the bank identified the issue in late 2018, but it was not raised to the bank’s board until May 2021, and not reported to the FMA for another seven months.
Approximately 38,586 accounts/policy holders were affected across both issues for the full period from late 2009, and approximately 25,497 accounts/policy holders from April 2014.
Overall, the bank overcharged the customers by around $7.4m, but has since repaid all the money with interest.
The penalty could have been as high as $10m, but the FMA and ASB jointly told the court that a starting point of $3m was appropriate.
O’Gorman said a penalty should be a deterrent for banks so customers could have confidence they did not need to double-check details of every transaction with their bank.
“The penalty must be set at a level that creates a strong incentive for financial institutions to maintain adequate systems and processes,” she said.
In October last year, IAG was fined $19.5m for similar failures to apply multi-policy discounts.
After O’Gorman issued her fine, ASB issued a statement from Adam Boyd, the bank’s executive general manager for personal banking, saying: “Putting things right where we have made mistakes is important to us.”
He said: “We apologise once again to these customers. We have made changes to our processes, including working closely with our insurance partner in relation to the multi-policy discount matter, to prevent these issues happening in the future.”
ASB, which last year settled a class action law suit after lending disclosure errors, and IAG are not the only large financial services companies that have had to confess to errors and overcharging.
As a result of errors identified by insurers Suncorp (owner of the Vero brand), Tower, AA Insurance, Cigna, AA Insurance, MAS, and ANZ have all all had to make refunds to customers, with Cigna, Vero, MAS, AA Insurance, and ANZ having been fined after court action.