The Commerce Commission says it has filed criminal charges against Kiwibank in the Auckland District Court alleging systemic breaches of the Fair Trading Act.
The consumer watchdog says the alleged breaches relate to issues causing more than $7 million in overcharges to over 36,000 customers for fees and interest rates in relation to home loans, credit cards and overdrafts, over several years.
The Commission says the issues were first identified by Kiwibank and reported by the bank to the Commission. Kiwibank has been contacting customers and is progressively refunding about $7 million.
"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," Commerce Commission Deputy Chair Anne Callinan says.
The charges relate to alleged overcharging since 2019. The maximum penalty a company can get is $600,000 for each breach under the Fair Trading Act. The Commission has filed 21 charges, meaning Kiwibank potentially faces a fine worth millions of dollars. All charges were filed under sections 13(i) and 40(1) of the Fair Trading Act.
"Lenders must have processes in place to ensure consumers are getting a fair deal and are charged what was advertised to them. The Commission expects banks to make the necessary investment in the systems that support their compliance obligations so they get things right for consumers," says Callinan.
Callinan says the charges stem from multiple errors in Kiwibank’s manual and electronic systems which resulted in Kiwibank misrepresenting what customers owed.
Meanwhile, a Kiwibank spokesman acknowledges the bank reported Fair Trading Act breaches to the Commission resulting from work the bank has done "to proactively seek out, investigate, and resolve issues where errors have been made."
"Kiwibank has fully co-operated with the Commerce Commission’s investigation and carried out a remediation programme for affected customers. All remediations will be completed by the end of this year, if not complete already. Our priority throughout this process has been to make things right for our customers and we are disappointed that we have let some of our customers down with these historic issues," the Kiwibank spokesman says.
14 Comments
No. Or at least not completely.
I got a random interest charge of some 70c on a revolving credit facility when the balance never went below zero for the entire month. (I download my account transactions and use an automated spreadsheet to check them before loading them into my DB.) I highlighted the error to Kiwibank and suggested to them it was a systemic problem. Such issues are usually down to poor programming and poor testing.
This isn't a problem isolated to Kiwibank either. I've caught every bank in NZ I've used doing this at least once over the last 20 years. Ditto insurance companies, especially if you make a midterm adjustment or you're entitled to cross policy / annual discounts.
True dat.
The major problem is that system architects with deep 'legacy system replacement' knowledge are few and far between. A further problem is that management won't accept that replacing a legacy system is not a 2 or 3 year project. To reduce risk (and massive, very public f##k ups) it needs to be done over a much longer period. These two issues mean banks start, and then stop, over an over again, but end up sticking with what they've got while their ICT suppliers milk them and customer pays.
Typical response from the ComCom. Kiwibank identifies an issue and is attempting to put right. Notifies the ComCom of the issue. And immediately is slapped with criminal charges. Surely with self-reporting the ComCom would take a pragmatic view and encourage honestly... clearly not. They really are a waste of space
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