IAG New Zealand Limited has been ordered by the High Court to pay a $19.5 million pecuniary penalty after admitting to multiple breaches of fair dealing requirements under the Financial Markets Conduct Act (FMCA).
The outcome follows an extensive investigation by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko, which found that IAG made misleading representations regarding its insurance products and failed to apply correct premium pricing and discounts.
According to the FMA, the insurer’s failures affected approximately 269,000 policyholders, resulting in overcharges estimated at $35 million.
The breaches, which occurred over several years, were identified and reported by IAG as part of an internal review process between September 2021 and December 2024.
While 10 of the most significant issues were the subject of the court case, an additional 31 matters – representing a further $21 million in remediation – were also disclosed to the regulator.
Justice Peter Andrew, who presided over the case, noted that the scale and persistence of IAG’s contraventions were significant factors in determining the penalty.
The judgment emphasised the importance of setting a penalty that would serve as a deterrent to other large financial institutions, reinforcing the need for effective systems and timely reporting of issues.
Andrew also pointed to IAG’s delayed notification of the breaches, particularly after a sector-wide review of culture and conduct, as an aggravating element.
Louise Unger, FMA executive director of response and enforcement, commented: “The nature and scale of IAG’s contraventions was greater than those present in any other fair dealing case the FMA has to date taken to court, and the judgment confirms they warrant a significant penalty.”
She added that the FMA will continue to address misleading practices to maintain a fair financial system in New Zealand.
IAG New Zealand acknowledged the High Court’s decision and stated that it had fully cooperated with the FMA throughout the investigation.
The company said it had self-reported the issues, admitted liability early, and taken steps to refund affected customers.
“Since self-identifying these issues, our priority has been to put things right for impacted customers, offering a sincere apology and issuing refunds," said Amanda Whiting, CEO of IAG New Zealand. "We are doing everything to prevent these issues happening again. The underlying issues have been fixed, and all affected customers’ repayments were completed earlier this year.”
IAG indicated it has invested in new systems and processes to address the root causes of the breaches and is committed to ongoing improvements to prevent recurrence.
