Insurance company Youi has been fined the maximum penalty of $100,000 by the Insurance Council (ICNZ) for misleading customers.
The fine is the harshest penalty the Council can impose, short of terminating a company's membership.
The South African-owned company has been warned any future misconduct may see it ousted as a member.
The charges, brought by the Commerce Commission, included misleading its customers about their ability to get online quotes, and telling them their bank details were required in order to provide a quote.
It also issued invoices to customers which they were under no obligation to pay, and debited customers' bank or credit cards without their permission.
ICNZ president Chris Black said Youi's business conduct had fallen well short of the industry's expectations.
"The Board of ICNZ considered the most severe sanction it could impose - termination of Youi's membership of ICNZ - but decided on a severe reprimand, the maximum financial penalty allowable and a warning that a recurrence would lead to termination," said Mr Black.
Youi chief executive Danie Matthee said the flaws in its customer service procedures were "not acceptable".
"That's why we're giving this full public apology to affected customers, our industry colleagues and the public.
Mr Matthee said the company had made "some mistakes", but one was too many.
"I would like to apologise to every affected customer personally and provide each one with the assurance of our commitment to achieving only the best customer outcomes. We remain committed to our staff in New Zealand who number almost 400 and who share our passion to provide quality products and awesome service to our customers."