The Bank of New Zealand has been warned by the Commerce Commission over likely responsible lending breaches and a failure to provide timely and accurate information to borrowers.
The bank reported 15 potential breaches of the Credit Contracts and Consumer Finance Act 2003 to the commission in late 2018.
The potential breaches related to some home loans, personal loans, credit cards and overdrafts entered into between June 6, 2015 and February 24, 2017 with 11,956 affected customers.
Today the commission said following its investigation it had warned the BNZ that it was likely to have breached its obligations under the act.
Commerce Commission chair Anna Rawlings said in its view BNZ had failed to meet the requirements of the act including by making errors when providing information required by the law.
"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.
"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."
The BNZ refunded $3.8 million in interest and fees to borrowers affected by the issues in late 2018.
Rawlings said the bank had co-operated with the commission throughout the investigation and in September this year it refunded $350 to each borrower affected - a total of more than $1m to more than 2300 affected borrowers.
"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," said Rawlings.
In a statement BNZ said the mistakes were caused by systems and process issues in 2015 and were discovered during an internal investigation.
The bank self-reported the issues to the commission in 2018 and had been working with them since.
Dan Huggins, BNZ executive customer products and services, said the bank sincerely apologised to every customer affected and it deeply regretted the errors.
"We hold ourselves to a high standard and in this case, we missed the mark.
"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."
Huggins said when the BNZ made a mistake its focus was always on ensuring it fixed the issue as quickly as possible.
The vast majority of customers affected by the errors had already received a letter confirming this and their payment.
But a small number of payments and letters would be processed over the next few days, he said.