Tower Ordered To Pay $7 Million For Misleading Customers On Discounts

Key Takeaways

• $7 million (NZ$11.8 million) Penalty: Tower was ordered to pay a significant civil penalty for misleading multi-policy discount representations.
• Widespread Customer Impact: Approximately 61,000 customers across 90,200 policies were overcharged more than $11.7 million (NZ$19.6 million).
• System Failures Over Nearly a Decade: The issue persisted from September 2016 to February 2025, despite a 2017 settlement intended to fix discount system errors.
• Regulatory Cooperation: Tower self-reported the issue, assisted the investigation, and completed a remediation program to repay affected customers.
• Market Integrity Focus: The FMA stressed that fair dealing and reliable systems are essential to maintaining trust in New Zealand’s financial markets.

Deep Dive

General insurer Tower has been ordered to pay a $7 million (NZ$11.8 million) penalty after the company overstated the value of its multi-policy discount and overcharged tens of thousands of customers for years.

The penalty follows civil proceedings brought by the Financial Markets Authority (FMA) in the High Court in Auckland. Tower self-reported the issue in March 2021 and admitted breaching section 22 of the Financial Markets Conduct Act by misleading customers about their discounts in invoices and marketing material.

For more than two decades, Tower had promoted multi-policy discounts for households holding more than one qualifying policy. But between September 10, 2016 and February 2025, those discounts were not always correctly applied. Roughly 61,000 customers (representing around 90,200 policies, or about 11% of Tower’s nationwide book) were affected.

The company has already carried out a remediation program and repaid more than $11.7 million (NZ$19.6 million) in overcharges.

Previous Warning, Recurring Issues

The court noted that this was not the first time Tower’s systems had fallen short. In 2017, the insurer entered into a settlement with the Commerce Commission over similar issues linked to discount calculations. That earlier agreement required Tower to fix its systems to ensure the discounts were correctly applied in the future.

Justice O’Gorman said the FMA was “justifiably critical” that Tower had already been expected to invest in stronger systems, yet problems still persisted nearly a decade later.

Discount Claims Must Match Reality

Margot Gatland, the FMA’s Head of Enforcement, said Tower used the advertised discounts to attract and retain customers without ensuring its systems could consistently deliver them.

She acknowledged that Tower self-reported, cooperated with investigators, made admissions, and took steps to pay customers back. But she stressed that the FMA’s role is to ensure a fair and trustworthy financial market, and customers must be able to rely on what they are told about pricing.

“Confident participation in New Zealand’s financial markets can only exist if an intrinsic level of market integrity exists,” she said, warning that the regulator will continue to take action in response to “fair dealing breaches like this.”

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