One of the country’s biggest banks is being ordered to repay customers nearly $9 million after overcharging fees.
The Commerce Commission is warning ASB over the lending failures which are thought to have breached its obligations under the Credit Contracts and Consumer Finance (CCCF) Act.
Over 48,000 Early Repayment Adjustment (ERA) fees were overcharged from consumers who ended their fixed-term rate loans early between April 2005 and December 2016 due to calculator errors. Meanwhile nearly 11,000 ERA fees were undercharged by ASB.
The news comes after ASB stood out as the lowest-ranked for overall customer satisfaction in an investigation by Consumer New Zealand.
Only 58 per cent of ASB customers were happy with the service they were receiving, well below the industry average of 64 per cent.
Most of the affected loans were home loans, with the rest being made up of business loans, asset finance, commercial, personal and rural loans.
Commerce Commission Chair Anna Rawlings said the bank is also thought to have breached the Fair Trade Act by exceeding the fee.
“Lenders must implement robust systems and processes to help them to comply with their legal obligations.
“Those processes should include adequate checks to identify and rectify failures quickly if they arise.”
ASB has already begun to pay back the $8.9 million owed to borrowers, a significant proportion of which has already been repaid since it started in July 2020.
Those affected by the error will also be paid the difference between ASB’s actual and intended charge with interest.
"We sincerely apologise for the error we made in calculating early repayment amounts charged to some customers who broke their fixed term loan agreements and the impact this may have had," the bank said in a statement.
"This error occurred when customers received an indicative calculation of what the early repayment amount would be if they were to repay their loan early, but this amount was not recalculated and updated at the time the loan was repaid. We have made changes to our processes to ensure calculations are up to date going forward."
ASB reported itself to the commission.
ASB was also found to be in breach of its lender responsibilities by the Commerce Commission under the CCCF Act last month.
The bank agreed to repay $8.1 million after it admitted to failings in its processes to ensure required information was given to customers making changes to their home or personal loans.