ASB hit with $2.1m penalty after overcharging 25,000 customers

AI-era bank under fire for legacy system failures

By Mina Martin

05 Mar 2026

ASB Bank has been ordered to pay a $2.1 million penalty after the High Court found it breached fair‑dealing obligations across its insurance and business banking services.

The action, brought by the Financial Markets Authority (FMA), highlights growing regulatory scrutiny of banks’ systems and conduct at a time when ASB is rapidly reshaping its operations with artificial intelligence and digital channels.

The case centred on ASB’s failure to correctly apply multi‑policy discounts on ASB‑branded insurance policies and to honour fee exemptions for eligible FastNet Business customers.

The errors went undetected for years, leading to financial detriment for tens of thousands of customers. ASB has refunded about $4.7 million to more than 25,000 affected customers as part of its remediation programme.

Judge warns against weak systems and manual processes

In her judgment, Justice Laura Anne O’Gorman stressed that penalties must be high enough to push large institutions to invest in robust controls and technology.

“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,” O’Gorman said. “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.”

The ruling underlines expectations that banks proactively identify, escalate, and fix conduct issues, rather than relying on customers or chance discovery.

FMA: customers must trust banks to get it right

Margot Gatland (pictured), FMA head of enforcement, said the case sends a clear compliance message to the wider industry.

“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’s failed to detect and address these issues over many years,” Gatland said in a media release.

“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.”