The High Court has ordered ASB Bank Limited to pay a $2.1m penalty after the bank admitted making false and misleading representations that caused financial harm to more than 25,000 customers across its insurance products and banking services.
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – brought civil proceedings against ASB following two causes of action: the bank’s failure to correctly apply multi-policy discounts on ASB-branded insurance products, and its failure to apply fee exemptions for eligible FastNet Business customers.
The breaches resulted in more than 25,000 customers being refunded about $4.7 million by ASB, according to the FMA.
The multi-policy discount issue affected 23,062 customers between April 2014 and May 2022, with overcharged premiums totalling about $2.8m, the FMA said. A further 2,435 customers were affected by the FastNet Banking issue during the same period, amounting to about $1.15m in overcharges. The affected FastNet accounts included Society Cheque, Education Administration and Business Focus accounts.
In her judgment, Justice O’Gorman said: “Where contraventions of the FMCA are the result of process or system failures, the penalty must be set at a level that creates a strong incentive for financial institutions to maintain adequate systems and processes. The penalty needs to be at a level that clearly signals manual processes without adequate quality assurance and proactive problem detection and escalation is unacceptable.”
FMA head of enforcement Margot Gatland said the penalty reflected the scale of ASB’s systemic failures.
“This penalty reflects the seriousness of ASB’s systems failures. Customers are entitled to rely on their bank to apply discounts and fee exemptions accurately. ASB failed to detect and address these issues over many years,” Gatland said.
“We acknowledge ASB’s cooperation, however, the duration of the failings and the delays in identifying and escalating the issues meant that a strong regulatory response was necessary,” she added.
The FMA acknowledged that ASB self-reported both issues – the multi-policy discount matter in September 2021 and the FastNet Banking issue in December 2021 — and that the bank carried out remediation and repaid affected customers, including use-of-money interest.
ASB made $1.45b in profit in the 12 months to June 2025, according to The New Zealand Herald.
The ASB ruling is part of a broader pattern of FMA enforcement action. In July 2025, Southern Cross Benefits Limited – trading as Southern Cross Travel Insurance – admitted liability for misleading discount representations and paid $1,105,000 to the Crown under an enforceable undertaking, according to the FMA. The regulator found that while the insurer’s website and customer communications stated discounts would apply to entire premiums, they were in fact applied only to base premiums. The difference in discounts totalled $3.5m, which Southern Cross repaid to customers.
The same year, the FMA secured a $19.5m penalty against IAG New Zealand Limited after the High Court found it had made false and misleading representations across its insurance products. Around 269,000 customers were affected, with overcharges totalling about $35m, the FMA said. Justice Andrew found the nature and extent of IAG’s breaches to be “the most aggravating feature of its conduct” and said the penalty needed to send a clear message to similarly large and well-resourced institutions about investing in robust systems.
FMA executive director of response and enforcement Louise Unger said IAG’s significant underinvestment had led to widespread failures affecting customers. Some of the issues dated back more than 20 years, although the regulator’s claim was limited to conduct from April 2014, when the FMCA came into force.
The Conduct of Financial Institutions (CoFI) regime, which came into full force on March 31, 2025, requires banks, insurers, and non-bank deposit takers to be licensed and to maintain effective fair conduct programmes, according to the Ministry of Business, Innovation and Employment. The FMA has signalled the regime will continue shaping its regulatory approach in 2026.
