Co-operative Bank ordered to pay $2.48m over unlawful customer fees

The Co-operative Bank has been penalised by the High Court for a "fundamental failure" over fees for customers. Photo / File

The Co-operative Bank has been fined $2.482 million for charging its customers unreasonable fees after a Commerce Commission investigation.

The judgment imposed by the High Court at Wellington relates to 12 unreasonable fees charged by the bank across its lending products involving home and personal loans, breaching the Credit Contracts and Consumer Finance Act (CCCFA).

This includes home loan establishment fees and overdraft facility fees, with most being charged between June 6, 2015, and November 30, 2021.

Justice Victoria Heine said in her judgment the penalty “is not an amount that would be seen merely as the costs of doing business”.

She noted the circumstances behind the breaches varied from fee to fee, however, they suggested there was a “fundamental failure” within the bank at that time.

“I am satisfied that the penalty proposed is sufficient to contribute to deterring others from running the risk of non-compliance,” Heine said.

The commission’s investigation started after the Co-operative Bank self-reported its conduct, with the two bodies entering into a settlement agreement late last year.

Commission director of credit Sarah Bartlett said the Co-operative Bank has remediated 48,249 customers about $7.225m in overcharged fees and a use-of-money payment.

She said it was crucial banks have robust compliance practices and adequate processes and controls in place to catch these types of issues.

“Investing in compliance and rigorously auditing processes and controls is a crucial step towards avoiding an investigation, court action and a hefty penalty,” Bartlett said.

In a response posted to its website, Co-operative Bank chief executive Mark Wilkshire apologised to impacted customers.

“While it’s disappointing that we didn’t get it right the first time, we own our mistakes,” Wilkshire said.

“We identified the issue ourselves, reported it to the Commerce Commission, and proactively remediated customers. We’ve previously reported the issue to our customer-owners in our annual reports and at annual general meetings.”

The bank said an allowance for the penalty and remediation was made in the 2025 financial year and is not expected to impact its financial results for the year ending March 31, 2026.

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.

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