The Commerce Commission says ANZ New Zealand will pay customers $29.4 million, on top of $6 million previously paid, after admitting a breach of its responsible lending obligations in relation to a coding error within a loan calculator.
The consumer watchdog says this is the biggest settlement it has made with a single bank, and its first completed responsible lending case. The Commission is now seeking a High Court declaration that ANZ NZ’s conduct breached the Credit Contracts and Consumer Finance Act.
ANZ NZ failed to take the necessary care required of a responsible lender when providing loan variation information to more than 100,000 customers, the Commission says. The issue affected personal and home loan customers who agreed with ANZ NZ to vary their loans.
For its part ANZ NZ says it's sorry the issue happened, it worked quickly to fix the problem, owned up to it, and is ensuring no customers are disadvantaged, with further payments to impacted customers to be made over coming months.
ANZ NZ says it had an issue with a loan calculator between June 2015 and May 2016 that meant some interest to be charged to customers was left out when calculating their repayments or loan term.
(See our previous story on this issue here).
Below is the Commerce Commission's statement.
Commission obtains a further $29.4 million for ANZ customers after responsible lending breach
ANZ Bank New Zealand Limited (ANZ) has signed a settlement agreement with the Commerce Commission admitting a breach of its responsible lending obligations, and has also agreed to pay customers a further $29.4 million.
In the Commission’s first completed responsible lending case, the bank has admitted that when it provided loan variation information to more than 100,000 customers it failed to take the necessary care required of a responsible lender.
ANZ have previously paid affected customers around $6 million as a result of the error. After investigating, the Commission was able to obtain a further $29 million for affected customers. The settlement is the largest the Commission has had with a single bank.
As part of the settlement, ANZ has agreed to admit in High Court proceedings that it engaged in conduct that breached its responsible lending obligations. The Commission is now seeking a High Court declaration that the bank’s conduct breached the Credit Contracts and Consumer Finance Act (CCCF Act).
In May 2018 ANZ publicly confirmed that it had misstated the amount of interest on loans from 30 May 2015 until 28 May 2016 as a result of a coding error within a loan calculator used by its frontline bank staff. The issue affected personal and home loan customers who agreed with the bank to vary their loans. ANZ self-reported the issue to the Commission in 2017.
Under the CCCF Act, every lender must exercise the care, diligence and skill of a responsible lender in all initial and subsequent dealings with borrowers.
Customers covered by this settlement will be contacted directly by ANZ by physical letter.
As the matter is before the Court, the Commission will make no further comment at this time.
Background
Lender Responsibility PrinciplesLenders entering into or varying consumer credit contracts after 6 June 2015 are required to comply with the lender responsibility principles, as set out in the CCCF Act.
The lender responsibility principles impose obligations on lenders to exercise the care, diligence, and skill of a responsible lender at all times, including when advertising, before entering into a loan, and during all subsequent dealings with borrowers and guarantors.
These principles apply not only to consumer loans, but also to credit-related insurance contracts, guarantees and buy-back transactions. Lenders must act carefully and responsibly at all times and treat borrowers reasonably and with respect.
And here's ANZ's statement.
Further payments for loan calculator error
Between June 2015 and May 2016, ANZ had an issue with a loan calculator which meant some interest to be charged to customers was left out when calculating their repayments or loan term.
The Commerce Commission today announced it had agreed with ANZ that ANZ would pay some customers affected by the issue a further $29.4 million, in addition to the $6 million ANZ has paid previously.
“We’ve worked with the Commerce Commission since 2017 to help them understand what happened and how it impacted our customers,” said Ben Kelleher, Managing Director Retail and Business Banking for ANZ.
“In 2018, we wrote to impacted customers, and if customers were underpaying because of the problem, we gave them a credit, so customers paid less than they'd agreed to under their loan agreement.
“While we believe our initial payment to impacted customers was fair and better than overseas examples, after discussions with the Commission, we'll make a further payment to around 86,000 accounts to recognise that we didn't meet our lender responsibilities under section 9C(2)(a)(ii) of the Credit Contracts and Consumer Finance Act 2003.
“ANZ is sorry this issue happened. We worked quickly to fix the problem, owned up to it, and we've made sure no customers are disadvantaged. We’ll begin to make the further payments to relevant customers over coming months.”
All amounts in relation to this matter were provided for in the period to 30 September 2019.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.