The FMA has issued warnings to Southern Cross Medical Care Society (SCMCS) and Southern Cross Pet Insurance (SPCI) for failing to apply advertised discounts to their insurance products.
The regulator found SCMCS overcharged almost 2,000 customers to the tune of $161,547. And that 7,542 pet insurance clients were overcharged $424,508. Most affected customers have been sent a refund by the insurer. Some of the overcharging continued for 17 years.
In a statement, the FMA says it’s satisfied the organisations breached the fair dealing provisions of the Financial Markets Conduct Act by making false or misleading representations.
FMA Director of Specialist Supervision Peter Taylor said: “The FMA considers the wider Southern Cross Group did not provide adequate information to its customers when it publicly acknowledged the issues concerning its failure to properly apply the discounts.
“The FMA expects entities to have better systems and controls in place to identify and prevent issues as early as possible and to be transparent with customers when problems arise.”
The regulator says the cause of the overcharging was due to poor controls and/or technical errors at Southern Cross.
The issues came to light when SCPI reported some of the contraventions to the FMA in 2022, and later reported more details. Further enquiries by the FMA, and an internal review in the wider Southern Cross Group, revealed the extent of the contraventions.
It was found that SCMCS failed to correctly apply the following discounts:
- Free child discount
- Healthy lifestyle rewards discount
- Low claims discount
SCPI failed to correctly apply the following discounts:
- Additional pet discount
- Direct debit discount
- Southern Cross membership discount
Taylor said: “The FMA has considered the level of harm caused and that both entities have repaid most of their customers. They cooperated proactively with the FMA and there is no evidence of any deliberate misconduct.
“Yet, the entities failed to apply the promised discounts over a prolonged period, in SCMCS’s case some 17 years.”