BNZ refunds over $1m to customers after Commerce Commission investigation

December 2, 2020

Bank of New Zealand has refunded $350 to each borrower affected by its "likely failure to meet responsible lending obligations", the Commerce Commission revealed today.

After an investigation by the commission, BNZ co-operated and refunded more than $1 million to more than 2300 affected borrowers in September.

The investigation found that, in 2018, BNZ reported 15 potential law breaches the commission, relating to certain home loans, personal loans, credit cards and overdrafts entered into or varied between 6 June 2015 and 24 February 2017, with 11,956 affected customers.

Following the investigation, the bank received a warning from the Commerce Commission over what it described as "likely responsible lending breaches and failures to provide timely and accurate information to borrowers".

According to the commission, BNZ likely breached responsible lending and disclosure obligations under the Credit Contracts and Consumer Finance Act 2003.

"In the commission’s view, BNZ failed to meet the requirements of the CCCF Act including by making errors when delivering information required by the act. For example, in some cases BNZ provided incomplete or inaccurate disclosure, and in other cases disclosure was provided a day, a few days, or as many as seven months after the information should have been provided to borrowers," Commerce Commission chair Anna Rawlings said in a statement today.

"We expect lenders to regularly audit their systems to make sure that they can comply with consumer credit law, or quickly identify problems if they arise, fix them and provide appropriate remediation to borrowers."

In late 2018, BNZ refunded approximately $3.8 million in interest and fees to borrowers affected by these issues.

However, BNZ was let off with a warning due to its action to remedy the error.

"BNZ has identified these matters itself and reported them to the commission, made remediation payments to its customers and made system changes to reduce the risk of issues like this arising in the future. Taking into account those steps, and consistent with our  Enforcement Response Guidelines,  we have decided that it is appropriate to issue a warning to BNZ for this conduct," Rawlings said.

BNZ executive of customer, products and services Dan Huggins today apologised for the error.

"We deeply regret the errors. We hold ourselves to a high standard and in this case, we missed the mark," he said.

"While no customer was out of pocket or raised any concerns with us, it's possible people may have been confused by the errors in their documents, so we’re putting it right.

"When we make a mistake, our focus is always on ensuring we fix the issue as quickly as possible and make it right for our customers."

Huggins said affected customers did not need to do anything, and that the majority of customers affected by the errors would have have already received a letter confirming this and their payment, with "a small number" of additional payments and letters to be processed over the next few days.

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