Tower fined $7m over multi-policy discount errors

Tower has been ordered to pay a NZD 7 million penalty by the High Court following the misapplication of multi-policy discounts (MPDs) affecting approximately 61,000 customers. The total MPD misapplication amounted to around NZD 11 million. The Court's decision follows Tower's self-reporting of the issue and admissions of contraventions of the Financial Markets Conduct Act. Both Tower and the FMA recommended the NZD 7 million penalty, which has already been provided for in Tower's past financial results.

The company is nearing completion of a comprehensive remediation program to compensate affected customers, with approximately NZD 12 million, including interest, expected to be paid out. The FMA and Tower agreed that the contraventions stemmed from system and process failures, not management decisions, with the Court noting the errors were unintentional. Tower's chair, Michael Stiassny, reaffirmed the company's commitment to fair customer value and acknowledged the impact on customers, stating, "Tower acted in good faith and fully acknowledged that mistakes were made."

In response to the issues, Tower has made significant investments to improve its systems and processes and is removing the multi-policy discount from its insurance offerings. The company remains focused on continuous improvement to prevent future errors.