Insurance company Vero has been ordered to pay $3.9 million in the largest ruling of its kind for the Financial Markets Authority (FMA).
In June 2023, Vero admitted to not properly applying multi-policy discounts to some customers, resulting in a breach of the Fair Dealing provisions of the Financial Markets Conduct Act.
The Auckland High Court has now ordered Vero to pay $3.9 million for failing in its duty.
Vero has already reimbursed $13.97 million in overcharges to affected policyholders and $95,845 to charities where affected customers could not be reached.
At the penalty hearing this week, his Honour Justice Venning imposed a starting point of $6 million, a discount of 35 percent and a final penalty of just under $4 million.
Justice Venning said Vero had no adequate explanation for its failure to detect the issue earlier.
FMA Head of Enforcement Margot Gatland said the penalty being the largest of its kind reflects the seriousness of deficiencies in Vero’s systems.
"It reinforces the importance of firms to invest properly in systems that deliver benefits as promised to customers," Ms Gatland said, "it should remind the industry that financial institutions will be held to account if they fail to sufficiently invest in systems."
A spokesperson for Vero acknowledged the ruling and said since discovering the issue themselves in 2019, they have done everything to make things right with their customers.
"Finding errors and fixing them is an important part of doing business," the spokesperson said, "we have worked thoroughly and conscientiously alongside our distributing partners and intermediaries and fully reimbursed (with interest) both past and present customers that were entitled to the discount."
Approximately 42,000 customers were impacted and collectively overcharged $9.9 million in premiums because of the issue.
