A failure to correctly discount fees on a number of different banking packages has led to Westpac Bank having to refund 93,000 customers $7 million in fees.
The Bank self-reported the issue to the Financial Markets Authority (FMA) and Commerce Commission in December 2017.
Westpac then identified more impacted customers over the following 12 months.
The bank has agreed to refund all fees and charges that have been incorrectly charged and says it will take all reasonable steps to reach impacted customers.
The FMA was notified of the issue because of potential breaches of the fair dealing provisions of the Financial Markets Conduct Act (FMCA).
The Commerce Commission was also involved because of possible breaches relating to consumer credit contracts under the Fair Trading Act (FTA).
Westpac accepted that it may have contravened one or both of the Acts.
The process for remediation is contained in an enforceable undertaking that Westpac has agreed to give the FMA and the Commerce Commission.
The undertaking confirms that Westpac will notify the FMA when it has completed this process.
Westpac NZ Acting General Manager of Consumer Banking and Wealth, Gina Dellabarca, said the issue was identified as part of a proactive review of products and services initiated by Westpac NZ.
"In each case where errors were found, Westpac independently identified the error, contacted the regulator, and initiated a process to inform and compensate customers," she said.
"We apologise to all the customers affected, most of whom we have already refunded. In most instances the individual amounts are small and are the result of errors in manual processes. We want to assure our customers that we have now changed our systems so that the issue does not occur again."