The High Court has penalised the company $7 million for more than a decade of overcharging customers because it did not properly apply multi-policy discounts.
The civil case was brought by the Financial Markets Authority (FMA) as it continued mopping up historic breaches by insurance, finance, and insurance companies of misleading fair trading laws.
FMA head of enforcement Margot Gatland said Tower’s systems were deficient, despite an agreement with the Commerce Commission as far back as 2017 to fix them.
“Tower used the advertised MPDs (multi-policy discounts) to attract and retain customers, without having systems that could reliably deliver on the promised discount.”
Agreed to fix problems, but overcharging continued
Tower self-reported the breaches in 2021, but despite its previous undertakings the overcharging went on until early this year.
About 61,000 policy holders with more than 90,000 policies were overcharged, with Tower repaying more than $11.7m to affected consumers.
The judgment said Tower was justifiably critical that the previous settlement with the Commerce Commission was intended to ensure that Tower sufficiently invested in and maintained adequate systems and processes to ensure any MPD was applied correctly.
Gatland said the FMA would continue to promote “fair, efficient, and transparent 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.”
Over the past five years the FMA has taken action against 10 banks and insurance companies for misleading and overcharging customers, resulting in penalties totalling tens of millions, repayments of more than $200m to about 1.5 m customers.
