The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has issued warnings to Southern Cross Medical Care Society (SCMCS) and Southern Cross Pet Insurance (SPCI) for failing to apply advertised
discounts to each entities’ respective insurance products.
The FMA is satisfied, and both entities accept, that they breached the fair dealing provisions of the Financial Markets
Conduct Act by making false or misleading representations. The representations relate to the failure on each entities’
part to correctly apply advertised discounts to affected customers’ invoices, resulting in overcharged premiums. The FMA
determined that the cause of each issue was due to poor controls and/or technical errors.
SCPI made an initial report to the FMA in November 2022 disclosing some of the contraventions and later reported more
details. Following these disclosures, further enquiries from the FMA and an internal review in the wider Southern Cross
Group, the extent of the contraventions was established.
SCPI failed to correctly apply the following discounts:Additional pet discountDirect debit discountSouthern Cross membership discount.
SCMCS failed to correctly apply the following discounts:Free child discountHealthy lifestyle rewards discountLow claims discount.
The total amount of SCPI premiums overcharged was $424,508, affecting 7,542 customers, approximately 1.28% of its
customer base. SCMCS overcharged $161,547 across 1,957 customers, approximately 0.2% of its customer base.
Both entities have completed remediation programmes. SCPI has refunded 96% of its affected customers while SCMC has
refunded 90% of its affected customers.
FMA Director of Specialist Supervision Peter Taylor said: “The FMA considers that making this warning public is
proportionate considering a range of factors. 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.
“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.”