Insurance giant IAG has been convicted on 30 breaches of the Fair Trading Act and fined more than $127,000.
It was sentenced in Auckland District Court yesterday, after admitting to making false or misleading representations about its customers' right to choose their windscreen repairer.
The company, which also owns State
Insurance, handles more than 100,000 windscreen claims a year.
Prosecutor Antonia Dowgray, appearing for the Commerce Commission, told Judge Josephine Bouchier IAG call centre staff had told customers they had no choice but to use Smith & Smith Glass for windscreen repairs.
The staff advice was contrary to company literature that said they could have repairs done anywhere, and IAG - which only had a preferred repairer arrangement with Smith & Smith - should have told staff about the customers' right to choose their repairer, she said.
The offending took place from mid 2003 to October 2004, and IAG's slowness in fixing the problem was a "wilful and deliberate deceit" Ms Dowgray said.
IAG held the largest share of private motor vehicle insurances in New Zealand, and fines totalling $190,000, less one-third for the company's early guilty pleas, would be appropriate, she said.
Counsel for IAG, Sarah Keene, told Judge Bouchier customers had been misinformed due to an "oversight in training of call centre staff".
She said IAG was "a responsible corporate entity" that took compliance issues "very, very seriously", but was also responsible for delivering many "complex" products.
"Unfortunately, in this case, that complex message was not delivered accurately."
Ms Keene said IAG "deeply regrets" its actions.
The offending happened at a time when State and IAG were in the process of integration, but the company agreed a fine was appropriate, she said.
Judge Bouchier, in sentencing, said IAG's actions did not constitute "complete recklessness", and acknowledged the difficulties for large companies in providing adequate staff training while maintaining quality services.
She then fined the company $3350 on 20 of the charges, and $6000 on each of the remaining 10.
The company was also ordered to pay costs of $10,000 to the Commerce Commission and $3900 to the court.
- Additional reporting NZPA
