Tower compensates customers for $1m error

Thanks to another administrative mishap, Tower Limited has been ordered by the corporate regulator to give $1 million back to customers whom it accidentally overcharged and underpaid.

Tower notified the Australian Securities and Investments Commission (ASIC) of the errors last May after it discovered about 3000 clients in the now terminated Tower Superb Master Trust had been charged incorrect fees and had not received capital gains tax benefits.

ASIC yesterday ordered the trans-Tasman insurer and wealth manager to compensate affected investors and appoint an independent consultant to oversee the process.

This is the second time Tower has had to present an enforceable undertaking to ASIC, having made similar administrative errors last December when policy holders were overcharged approximately $4.9 million.

Although ASIC has expressed some disappointment with Tower, it has also praised it for coming forward so quickly and has stated that there is no need for the company’s customers to be alarmed.

Tower chief executive of risk David Callander said the errors were discovered as part of a review of administrative systems.

“We’ve been doing a bit of a tidy up of our business over the last couple of years. All our super policies are a lot more complex these days so we’ve deliberately gone through and looked at everything. We discovered this [error] in about May last year and we basically talked to ASIC and APRA [Australian Prudential regulation Authority] immediately after we thought there was a possible problem.”

Callander said he was confident Tower’s systems were now clean.

Several other financial services companies have experienced similar problems to Tower, including MLC, which had to reimburse customers $60 million after unit pricing errors, and AMP, which repaid $90 million to customers after administrative errors early last year.