Lawsuit seeks compensation for about 150,000 customers
ASB, one of New Zealand's leading banks, is appealing a High Court decision that allowed a class action lawsuit to proceed against the bank. The Court of Appeal hearings began on Tuesday and are scheduled to continue throughout Wednesday.
The lawsuit, filed in September 2021 by litigation funders CASL and LPF Group, seeks multimillion-dollar compensation on behalf of approximately 150,000 customers of ANZ and ASB, according to a report by interest.co.nz. The plaintiffs argue that the two banks should refund customers for interest payments they were not entitled to retain due to inadequate disclosure of certain changes. They aim to represent all affected customers, even those who have not opted into the case.
ASB is challenging the High Court's ruling that allowed the case to proceed on an "opt-out basis." In a statement to the NZX, ASB stated that the proposed class action would cover all customers who had a home or personal loan with the bank between June 2015 and 2019 and were not provided with compliant disclosure. The bank argues that the case should not be treated as an opt-out proceeding and denies the claims made against it, which it intends to defend in court, interest.co.nz reported.
The plaintiffs contend that ASB should not be allowed to retain any interest or fees paid by affected customers during the period of insufficient disclosure. Both ASB and ANZ have previously settled with the Commerce Commission, admitting to breaching their responsible lending obligations and agreeing to multimillion-dollar settlements. However, the plaintiffs argue that these settlements do not prevent customers from pursuing further legal action.
The class action is being brought under the Credit Contracts and Consumer Finance Act (CCCFA) and asserts that the banks should refund interest and fees that they were not entitled to charge due to breaches of their disclosure obligations.
“If a bank fails to comply with its disclosure obligations, it is not legally entitled to charge interest or fees on the affected loan until the failure is remedied,” solicitor Scott Russell, representing the plaintiffs, told interest.co.nz. “To the extent a bank receives interest or fees it is not entitled to, it must refund or credit those amounts to the customer as soon as practicable.”
During Tuesday's court proceedings, ASB's lawyer, Jack Hodder KC, argued that the opt-out class action was overly broad and poorly defined in terms of the class of affected customers. He highlighted the variability of the disclosures made to customers, making it challenging to determine if the alleged breaches applied to all or only some of the customers in question.
In response, Davey Salmon KC, the lawyer for the plaintiffs, said that a broad class action allows justice to be served for customers who may not be motivated to take individual action against influential financial institutions. He noted that many customers are reluctant to challenge such institutions for fear of negative consequences.
ASB's lawyer also argued that customers who may have received insufficient disclosure and continued paying interest did not suffer any specific harm. He suggested that the plaintiffs' motivation was simply a desire for interest-free loans and that there was no significant harm beyond customers not wanting to pay interest.
The plaintiffs' lawyer countered this argument by stating that the issue was not about customer loss but rather about the banks taking money they were not entitled to. He maintained that ASB and ANZ were legally prohibited from charging interest without appropriate disclosure and were now attempting to retain funds that were not rightfully theirs.
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