The High Court in Auckland has imposed a $7 million fine on Tower Insurance for misleading representations that caused its customers to be overcharged by more than $11 million.
Tower voluntarily disclosed the issue to the Financial Markets Authority Te Mana Tātai Hokohoko (FMA) in March 2021. This has led to civil proceedings initiated by the FMA in the High Court at Auckland.
The insurer acknowledged breaching section 22 of the Financial Markets Conduct Act by providing misleading information to customers on its invoices regarding the multi-policy discount (MPD) offer since September 10, 2016, which led to overcharging.
The overcharging persisted until February 2025, impacting approximately 61,000 customers or 90,200 policies. Tower also conceded to making false or misleading claims in its marketing materials regarding multi-policy discounts (MPDs).
The FMA said Tower has completed remediation and refunded more than $11.7 million to customers.
In 2017, Tower reached a settlement agreement with the Commerce Commission, agreeing to rectify its policy system following a historic problem that led to miscalculated multi-policy discounts.
According to Justice Laura O’Gorman, the FMA was “justifiably critical that the previous settlement was intended to ensure Tower sufficiently invested in and maintained adequate systems and processes to ensure any MPD is applied correctly.”
Margot Gatland, the FMA’s head of enforcement, stated that Tower’s problems originated from shortcomings in its systems.
“Tower used the advertised MPDs to attract and retain customers, without having systems that could reliably deliver on the promised discount,” Gatland said.
“The FMA acknowledges that Tower self-reported the multi-policy discount issues, cooperated with the FMA’s investigation, made admissions and carried out a comprehensive remediation programme.
“The FMA’s statutory objective is to promote and facilitate the development of fair, efficient and transparent financial markets and to promote the confident and informed participation of businesses, investors and consumers in financial markets.”
“Confident participation in New Zealand’s financial markets can only exist if an intrinsic level of market integrity exists. This is why we continue to respond to fair dealing breaches like this.”
Tower chairman Michael Stiassny said the company acted in good faith and fully admitted to making mistakes.
“It was pleasing that the court accepted Tower’s explanation of how the multi-policy discount errors occurred, saying that Tower had acted responsibly to address the breaches and that it was not a situation of historic system failures remaining unaddressed.”
“We fully respect the FMA’s role, noting that regulatory enforcement needs to be grounded in established principles, proportionality and fairness.”
“We accept and regret the impact this has had on our customers and apologise unreservedly to those who were charged inaccurately,” he said.