Banking: Financial Markets Authority v. ASB

  

ASB was ordered to pay a $2.1 million penalty after overcharging customers for nearly a decade, with the penalty increased in part because of its failure to act promptly on staff warnings.

In 2013, a member of the Bank’s wealth team was told to shut up after sending some sixty emails to his line manager warning that client insurance policy discounts were being wrongly calculated.

It was not until 2021, after a then recent royal commission on banking in Australia heavily criticised operation of retail banks, that ASB senior management sat up and took notice of the problem.

The High Court was told that since 2011 ASB staff had been miscalculating some insurance premium discounts for policies sold on behalf of IAG Insurance.

Confusion saw premium discounts not being given when bank customers had more than one qualifying IAG policy, and also discounts wrongly given when customers had more than one policy which included caravan and motorbike policies which were not eligible for a premium discount.

ASB and IAG jointly agreed to reimburse affected customers; ASB’s share being $2.9 million.

The High Court was also told ASB did not apply promised bank fee reductions for many FastNet business customers for the period 2011 through to 2020.

ASB senior management did not become aware of the extent of the problem until a mid-2019 ‘deep dive,’ following up complaints from business customers.

The fact bank fees were disclosed on business customer accounts as a single line item kept the issue hidden for years.  Anomalies only became apparent after some business customers asked for a detailed breakdown of fees charged.

Errors were found in 21 per cent of business accounts.

ASB told the High Court that the mistake was unintentional, not pursued for financial gain.

Errors arose because granting a fee concession was a manual procedure.  The Bank had no systems in place to ensure discounts were properly applied.

ASB self-reported its mistakes to Financial Markets Authority, admitting to breaches of the Financial Markets Conduct Act; making false and misleading statements in its provision of financial services.  Advertised discounts were not applied as promised.

ASB negotiated a $2.1 million penalty with Financial Markets Authority.

This penalty was approved by the High Court.

FMA has first claim on this money; recovering its costs.

Financial Markets Authority v. ASB Bank – High Court (4.03.26)

26.092

Asset Forfeiture: Commissioner of Police v. Piper

  

Partnership law principles underlie Police ability to selectively recover unlawful gains from ‘joint enterprise’ criminal activity; participants having the most readily accessible assets can wind up bearing the cost, their impecunious colleagues escaping proceeds-of-crime liability.

Meth production in Northland through 2021 saw Martin John Piper and Troy Kakau both facing asset forfeitures under the Criminal Proceeds (Recovery) Act.

The High Court was told of Piper sourcing precursor chemicals, supplied to Kakau who oversaw production of methamphetamine.

Both were convicted of drug offences.

Police calculation of the volume produced, and revenue earned, was helped by communication intercepts in which the two congratulated themselves on their meth cook’s skills; yielding 90 per cent meth from each kilogram of ephedrine supplied by Piper.

Forfeiture of assets to the value of $639,500 was ordered, as revenue earned from their criminal activity.

For Piper, in dispute at the High Court was: what credit could be claimed for an earlier criminal proceeds recovery against co-offender Kakau, and; whether a house on Admiralty Drive at Haruru in the Bay of Islands, registered in the name of Piper’s partner, could be confiscated.  

Evidence was given of Piper and his partner Lisa May O’Sullivan jointly purchasing Admiralty Drive back in 2015.

Whilst in custody, and before his criminal trial for meth dealing, Piper gifted his Admiralty Drive half share to Ms O’Sullivan; to ease insurance difficulties, he later told the High Court. 

Insurance was difficult to obtain when he faced criminal charges, he claimed.

Justice O’Gorman subsequently ordered forfeiture of Admiralty Drive, being financed from proceeds of crime. Ms O’Sullivan either knew mortgage payments came from proceeds of crime or deliberately refrained from asking questions that might confirm her suspicions, Justice O’Gorman ruled.

The High Court was told of assets previously being seized from Piper’s co-offender Troy Kakau to the value of $114,900; forfeited by court order as proceeds of crime for Kakau’s involvement in their joint meth activities.

Piper claimed a credit on any asset forfeiture order made against him for this earlier recovery from his co-offender.

Justice O’Gorman ruled a credit is necessary to avoid double-counting, unless the precursor chemicals provided by Piper were unrelated to batches of meth cooked by Kakau for which his assets were confiscated.

For Criminal Proceeds (Recovery) Act forfeitures, joint criminal ventures are treated as if they were law-abiding business partnerships.

With co-offenders jointly and severally liable to forfeit proceeds of their criminal activity, authorities may choose to chase all, or just one, for the amount due.

The High Court was told assets to the value of $114,900 previously confiscated from Kakau as proceeds of crime amounted to the full value of his then available assets: $79,300 cash plus proceeds from sale of his Holden ute and Harley Davidson motor bike.

Piper was held liable for the balance of their joint criminal enterprise ‘proceeds of crime debt:’ $524,600.

The High Court ordered sale of Admiralty Drive, together with sale of Piper’s two Land Rovers and his boat.  Cash totalling $26,200 was also confiscated.

The court was told Piper has form; previously in 2014 having cash, cars and a boat seized following a court-ordered proceeds of crime forfeiture.

Commissioner of Police v. Piper – High Court (3.03.26)

26.091