ASB has agreed to a $135.6 million settlement to resolve a class action lawsuit involving past breaches of credit disclosure laws. The amount is less than half of the $300 million initially offered to ASB in July, which would have settled the claims earlier.
The case concerns alleged breaches of credit laws against ANZ and ASB affecting over 150,000 customers, with banks accused of not providing required disclosures, resulting in excessive fees and interest charges.
Scott Russell, the lawyer for the ASB plaintiffs, stated that the settlement was reached without ASB admitting liability and is pending court approval. This settlement will bring to an end more than four years of legal proceedings against ASB.
“This is a positive outcome for affected ASB customers,” Russell said.
“After four years of litigation, settlement provides certainty, avoiding what would otherwise be a very long and expensive fight through the courts. It importantly also removes the risk around the government’s proposed retrospective law change in the CCCFA Amendment Bill.”
Russell confirmed that the case against ANZ, which also involves allegations of disclosure breaches, will proceed and that ANZ is contesting the claim.
“ANZ customers also deserve a positive outcome. In March 2020, ANZ admitted to the Commerce Commission that between May 2015 and May 2016, it sent loan variation letters to certain customers that contained incorrect information with respect to their loan.”
“We say that this was a breach of ANZ’s disclosure obligations and serious.”
“We remain fully committed to ensuring the rights of ANZ customers are upheld and ANZ repays the borrowing costs we say it was not allowed to charge or retain during the years it was allegedly non-compliant.”
If the ASB settlement receives approval, ANZ will be the sole known lender remaining in active litigation to potentially benefit from the government’s proposed retrospective amendment to the Credit Contracts and Consumer Finance Act (CCCFA).
The government is considering changes to the CCCFA that, if applied retrospectively, would enable courts to adjust compensation in bank liability cases depending on whether actual harm occurred.
“It is unclear why the government would intervene to protect one large Australian-owned bank,” Russell said.
“There was never any credible rationale for changing the law in the middle of an active court case. As acknowledged by the Treasury, the Banking Class Action never did and still does not pose a threat to the financial system or the funds available for lending. Changing the law now would not be in the public interest and would set a dangerous precedent – protecting a single, large Australian-owned bank.”
Russell also noted that the case against ANZ highlights the CCCFA’s role in protecting consumers and promotes broader compliance.
“We consider that the provisions relied on by the plaintiffs are not just about returning borrowing costs to customers. They also play an important role in deterring future breaches and ensuring banks and other creditors are motivated to invest in proper systems to protect their customers.”