Over 36,000 customers were allegedly charged $7 million in fees and rates
New Zealand's Commerce Commission, a government agency that regulates businesses, has filed criminal charges against Kiwibank, the country's fifth-largest bank.
The Commerce Commission alleges that Kiwibank systematically broke the Fair Trading Act, which is a law that protects consumers from unfair business practices, overcharging customers for fees and interest rates in relation to home loans, credit cards and overdrafts.
These alleged violations resulted in over $7 million in fees and interest rates being incorrectly charged to more than 36,000 Kiwibank customers over several years.
Commerce Commission deputy chair Anne Callinan said these are “serious charges”, stemming from multiple errors in Kiwibank’s manual and electronic systems which resulted in Kiwibank misrepresenting what customers owed.
“In the Commission’s view these are longstanding, systemic breaches of the Fair Trading Act some of which date back to Kiwibank’s inception in 2002,” Callinan said.
“The Commission expects banks to make the necessary investment in the systems that support their compliance obligations so they get things right for consumers.”
Remediation in progress
It was confirmed that the Commerce Commission was reported by Kiwibank after they identified the issues.
Callinan said Kiwibank has been contacting customers and is progressively refunding about $7 million in overcharges.
Kiwi’s the country’s largest New Zealand-owned bank which occupies around 9% of the market, confirmed with NZ Herald that they had fully co-operated with the investigation and carried out a remediation programme for affected customers.
“Kiwibank has fully co-operated with the Commerce Commission’s investigation and carried out a remediation programme for affected customers,” a bank spokesperson said to NZ Herald.
“All remediations will be completed by the end of this year, if not complete already,” the NZ Herald article stated the spokesperson as saying.
“Our priority throughout this process has been to make things right for our customers and we are disappointed that we have let some of our customers down with these historic issues.”
The Commission’s charges relate specifically to the overcharges from 2019 onwards.
