Kiwibank has been fined $1.5 million by the Commerce Commission following systemic breaches of the Fair Trading Act.
Kiwibank has been fined $1.5 million by the Commerce Commission following systemic breaches of the Fair Trading Act.
Kiwibank has pleaded guilty to systemic breaches of the Fair Trading Act in Auckland District Court, resulting in a $1.5 million fine from the Commerce Commission.
The commission prosecuted Kiwibank for 21 charges under the act for making misleading representations to its customers about its services, which the bank didn’tprovide on the stated and agreed terms.
The bank’s failure to disclose the services it provided led to 35,000 customers being overcharged a total amount of $6.8m in fees and interest rates related to home loans, credit cards and overdrafts.
Commerce Commission deputy chair Anne Callinan said that Kiwibank’s offending likely dated back to the bank’s inception in 2002.
“There were long-standing flaws in Kiwibank’s systems and processes that led to these breaches,” Callinan said.
“Banks must have processes in place to ensure consumers are getting a fair deal and consumers would reasonably assume that banks wouldn’t make errors of this sort.”
Kiwibank confirmedearlier this year that it had reported the breaches to the Commerce Commission.
The bank is carrying out a progressive $9.2m remediation programme for affected customers, which will be completed by March 2025, if not completed already.
The commission confirmed that the bank is progressively refunding $9.2m in remediation.
Kiwibank chief executive Steve Jurkovich said the bank was working to correct customer issues a quickly as possible. Photo / Supplied
Kiwibank chief executive Steve Jurkovich said that the bank’s focus has been on correcting issues for its customers as quickly as possible.
“We apologise for the errors and are committed to continuing to build an even stronger New Zealand bank to help make more Kiwis better off,” Jurkovich said.
All the charges presented by ComCom fell under section 13 of the Fair Trading Act, which relates to false or misleading representations, and another section of the act which covered relevant fines.
The commission explained that there were “significant failures” in relation to five issues with their customers.
Those issues included a failure to provide agreed discounts and interest-free periods for those in package benefit agreements, properly calculating customers’ repayments when they requested changes to loans and other discounts to overdraft interest rates for home loan customers.
Callinan said the errors were caused by Kiwibank’s electronic systems and a lack of quality assurance checks to ensure staff knew how to carry out processes required correctly.
“The Commission expects banks to make the necessary investment in the systems that support their compliance obligations so they get things right for consumers.”
Kiwibank was sentenced in the Auckland District Court on November 26.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
