Back 09 February 2026

FMG admits to making misleading statements and makes payment of $2.1 million

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MR No. 2026 – 4

FMG Insurance Limited and Farmers’ Mutual Group (together, FMG) has admitted to fair dealing breaches and, as well as remediating customers, has agreed to pay $2.1 million in lieu of a pecuniary penalty, pursuant to an enforceable undertaking.

Following an investigation by the Financial Markets Authority (FMA), FMG has admitted making misleading representations in relation to certain of its insurance products, breaching fair dealing provisions of the Financial Markets Conduct Act.

The FMA’s investigation followed a self-report by FMG and focused on two long running issues: customers being charged for specified items that provided no additional insurance benefit and incorrect inflation adjustments applied to sums insured.

FMA’s Head of Enforcement, Margot Gatland, said, “Insurers must ensure their representations to customers about cover, premiums, adjustments, and policy benefits are accurate, clear, and consistent with policy terms. Following our investigation, we determined that FMG’s representations to customers were false or misleading and caused customer harm.”

Specified Items

Between 2012 and 2024, some FMG customers with Household Contents policies were charged additional premiums for specified items even though those items were already covered under the general contents Sum Insured, meaning the specification provided no additional benefit.

From 1 April 2014 to 2024, 3,904 customers were affected, and have now been paid remediation of about $1,936,000 in overcharged premiums (including GST and use of money interest). FMG also made five claims top up payments totalling about $6,000 (including GST).

FMG acknowledges that it made misleading representations about the need to specify items and the additional cover customers would receive, breaching sections 22(d) and 22(g) of the FMC Act.

Indexation

Between 2013 and 2024, FMG applied annual flat rate increases to certain customers’ maximum insurance limits (Sums Insured), even where policies suggested such adjustments would be inflation-based  or no longer contained an inflation clause at all. These adjustments, which were inconsistent with policy wording, resulted in tens of thousands of customers being over or undercharged.

A total of 54,642 customers were affected between 1 April 2014 and 2024, with around 26,000 customers due a refund as a result of overcharged premiums and 480 customers paid claim top up payments.  FMG’s remediation for this issue totalled about $3,380,000 (including GST and use of money interest).

FMG made representations in renewal statements that inflation adjustments had been applied and premiums calculated in accordance with the policy terms, and that FMG had the right to charge those amounts. FMG now admits these were false or misleading representations, breaching sections 22(d), 22(f), and 22(h) of the FMC Act.

Ms Gatland acknowledged FMG’s cooperation and its commitments outlined in the enforceable undertaking that it will strengthen systems and rewrite policy wording to prevent recurrence.

“The FMA will continue to prioritise fair customer outcomes and take action where misleading conduct occurs in the financial services sector,” said Ms Gatland.

Ends

Download FMG Enforcement undertaking [330KB]