More than 36,000 customers were allegedly overcharged NZ$7 million.
The Commerce Commission, a government agency responsible for safeguarding customers from unfair business practices, is taking Kiwibank to court for systematically violating the Fair Trading Act, a significant piece of legislation that prohibits misleading and deceptive trader behaviour.
The alleged violations have led to the incorrect charging of over NZ$7 million in fees and interest rates on home loans, credit cards, and overdrafts to more than 36,000 customers since 2019. However, the Commerce Commission noted that issues have persisted since Kiwibank’s inception in 2002.
Kiwibank issued a statement acknowledging the criminal charges filed by the Commerce Commission, and has expressed its disappointment in letting its customers down.
Meanwhile, Commerce Commission deputy chair Anne Callinan said these are “serious charges,” arising from numerous errors in Kiwibank’s manual and electronic systems that led to the bank misrepresenting what customers owed.
“In the Commission’s view, these are longstanding, systemic breaches of the Fair Trading Act, some of which date back to Kiwibank’s inception in 2002,” Callinan said.
“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 has confirmed its full cooperation with the investigation and has initiated a remediation programme to resolve the overcharging issues. The bank has been reaching out to affected customers and is in the process of refunding approximately $7 million in overcharges.
“All remediations will be completed by the end of this year, if not already,” a bank spokesperson confirmed.
Kiwibank is New Zealand’s fifth-largest locally owned commercial bank. The court date for the bank’s criminal charges has not been scheduled yet.