Insurer Youi pleading guilty to 15 charges relating to misleading sales techniques, Commerce Commission says; Youi 'unreservedly apologises' to all affected customers

The Commerce Commission says insurer Youi will plead guilty to 15 Fair Trading Act charges alleging it employed misleading sales techniques when attempting to sell policies to consumers who were only seeking a quote. 

The Commerce Commission charges against Youi follow two detailed articles about the company written by freelance journalist Diana Clement for interest.co.nz. Clement's articles are here and here.

The charges are being filed against Youi in the Auckland District Court.

Specifically, the Commerce Commission alleges Youi: made false or misleading representations on its website regarding consumers’ ability to obtain a quote online; made false or misleading statements during telephone sales calls with consumers, including telling them bank or credit card details were required to generate a policy quote; asserted a right to payment for unsolicited insurance policies by sending letters demanding payment and/or debiting consumers’ bank or credit card accounts without their express permission or knowledge, and; sent invoices to consumers in relation to unsolicited insurance policies that did not specify that the consumer was under no obligation to pay for the policies.

"Youi has co-operated with the Commission’s investigation and has indicated that it intends to plead guilty to the charges," the Commerce Commission says.

For its part Youi says it acknowledges the validity of customer complaints relating to instances where policies were sold, when only quotes were requested and the failure to cancel insurance policies after being notified.

"Youi immediately took steps to resolve these complaints with affected customers directly. While these transgressions were not part of Youi's standard operating procedures, where the actions of employees or processes failed customer expectations appropriate remedial actions have been taken. Changes have been implemented to improve compliance with operational processes. Furthermore, the website content and disclosures have been updated to improve clarity, compliance and alignment with customer expectations," Youi CEO Danie Matthee says.

“From the point the issues were brought to our attention we co-operated fully with the Commission and speedily implemented changes to our business practices that had fallen short of customer expectations, service standards and legal requirements. We unreservedly apologised to all affected customers," Matthee adds.  

Here's the Commerce Commission's full statement

The Commerce Commission has filed charges in the Auckland District Court against insurance firm Youi NZ Pty Limited, alleging it employed misleading sales techniques when attempting to sell policies to consumers who were only seeking a quote. 

The 15 charges Youi faces under the Fair Trading Act are representative and relate to alleged misrepresentations made between July 2014 and February 2016. Specifically, the Commission alleges that Youi:

- made false or misleading representations on its website regarding consumers’ ability to obtain a quote online

- made false or misleading statements during telephone sales calls with consumers, including telling them bank or credit card details were required to generate a policy quote 

- asserted a right to payment for unsolicited insurance policies by sending letters demanding payment and/or debiting consumers’ bank or credit card accounts without their express permission or knowledge

- sent invoices to consumers in relation to unsolicited insurance policies that did not specify that the consumer was under no obligation to pay for the policies. 

Youi has co-operated with the Commission’s investigation and has indicated that it intends to plead guilty to the charges.  As this matter is before the Court, the Commission cannot comment further at this time. 

Background

Youi is an insurance company that offers home, contents and vehicle insurance products. It was incorporated in New Zealand on 6 June 2013 and began to operate in the New Zealand market on 28 July 2014. Youi is a wholly owned subsidiary of Youi Holdings Pty Ltd, which in turn is a subsidiary of OUTsurance International Holdings Pty Limited – part of the Rand Merchant Insurance Holdings Group, a large international insurance provider registered in South Africa. Youi has sister insurance companies registered and operating in Australia and South Africa.

And here's Youi's response

This response refers to a recent media publication that the New Zealand Commerce Commission (‘The Commission’) has filed charges against Youi NZ Pty Limited (“Youi”), under the Fair Trading Act 1986 (FTA).  

This follows customer complaints to the Commission in the period between March 2015 and February 2016. During the course of the investigation, Youi co-operated fully with the Commission by providing all requested data and information in a timely and transparent manner. 

Youi acknowledges the validity of customer complaints relating to instances where policies were sold, when only quotes were requested and the failure to cancel insurance policies after being notified. Youi immediately took steps to resolve these complaints with affected customers directly. While these transgressions were not part of Youi's standard operating procedures, where the actions of employees or processes failed customer expectations appropriate remedial actions have been taken. Changes have been implemented to improve compliance with operational processes. Furthermore, the website content and disclosures have been updated to improve clarity, compliance and alignment with customer expectations. 

Youi CEO Danie Matthee says “From the point the issues were brought to our attention we co-operated fully with the Commission and speedily implemented changes to our business practices that had fallen short of customer expectations, service standards and legal requirements. We unreservedly apologised to all affected customers.  

We entered the New Zealand market late in 2014 and experienced rapid growth. We are confident in our plans to build the business and to continue offering New Zealanders a compelling insurance alternative. We are also committed to our people who number more than 400 and whose collective commitment to Youi’s future is resolute.”