Staff Reporter
Auckland, September 24, 2020
Commerce Commission Chairperson Anna Rawlings (From CC website)
The New Zealand-owned Kiwibank has agreed to pay about $5.2 million to its customers after admitting that it failed to establish robust home loan variation disclosure policies and procedures and systems.
The amount payable to each customer will vary, depending on the amount of the loan and other matters, on a case-by-case basis.
Settlement Agreement with CC
Wellington-based Commerce Commission Chair Anna Rawlings said that the Bank entered into a Settlement Agreement with the Commission on August 27, 2020 admitting that it “had failed to act with the care, diligence and skill of a responsible lender and agreed to make remediation payments to over 48,000 borrowers, totalling $5.2 million.”
“Under the Credit Contracts and Consumer Finance Act 2003, lenders must act carefully and responsibly in all their dealings with their customers. This includes having appropriate systems and processes in place to manage customer accounts and to support compliance with the lender’s legal obligations to its customers,” she said.
Lender obligations
Lenders entering into or varying consumer credit contracts after June 6, 2015 are required to comply with the lender responsibility principles, as set out in the Credit Contracts and Consumer Finance Act.
The lender responsibility principles require lenders to exercise the care, diligence, and skill of a responsible lender always, including during all subsequent dealings with borrowers and guarantors.
They must also treat borrowers reasonably and with respect.
Ms Rawlings said that while Kiwibank had policies in place for disclosing more complex changes, its system and process failures affected the information it provided to some customers when they made simple changes, such as re-fixing interest rates or changing repayment amounts.
Kiwibank report
Kiwibank reported to the Commission in August 2019 that it failed to have in place robust home loan variation disclosure policies, procedures and systems for certain types of home loan variations in the period before April 2019.
Customers eligible for remediation will be contacted by Kiwibank and any enquiries should be directed to the bank.
