Bank ordered to pay $280,000 following insurance policy errors…

The High Court has ordered a bank to pay $280,000 following a number of errors that resulted in clients either being issued insurance policies that they were ineligible for, or duplicate policies without their consent.

For a period of over 20 years, the bank issued a number of clients that had existing insurance policies with additional policies without their knowledge. The clients were charged over $197,000 for the extra policies.

The bank also issued policies to 121 clients that did not meet the age criteria, and received over $22,600 in commissions and charges.

Although the bank identified the errors and took steps to correct them, due to poor processes in place it did not provide information about the errors to the Financial Markets Authority as required.

The Authority prosecuted the bank, which accepted that it was at fault. The Authority also suggested that a penalty of $280,000 was appropriate in the circumstances.

The Court agreed with the proposed penalty and ordered the bank to pay a penalty of $280,000. It explained that the bank’s conduct undermined confidence in the market and broke the law. Additionally, the Court expressed the need for a penalty as a deterrent to other financial institutions, although the breach was not deliberate.

It is important that banks ensure that their processes for detecting errors in their systems, and appropriately addressing them, are robust and effective. Failure to do so may result in an expensive prosecution.

If there are concerns that a bank has failed to provide you with the services that you have agreed upon, it is wise to speak with a professional experienced in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.