New Zealand’s Co-operative Bank has admitted breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and remediated 48,249 customers NZ$7.225m for charging higher fees than it should have.
In a post on its website, the commission said the bank has entered into a settlement agreement, and the Commission’s claims will now go to the High Court, which will decide the pecuniary penalty.
It comes after the bank alerted the commission to the concerns it had about the fee amounts it had charged customers. The commission conducted an investigation into bank and filed proceedings in relation to the charging of unreasonable fees under the CCCFA.
Commission director for credit Sarah Bartlett said banks have a responsibility to charge reasonably and customers should be able to trust that this is always the case.
“Charging unreasonable fees doesn’t just erode trust in the banking sector,” she added, “it has a direct and tangible impact on consumers’ wallets, often hitting those least able to absorb unexpected costs.”
The bank was found to have charged 12 unreasonable fees across its lending products involving home loans and personal loans, including Home Loan Establishment Fees and Overdraft Facility Fees, with most being charged during the period of 6 June 2015 to 30 November 2021.
“Co-operative Bank’s conduct fell short of what we would expect from a responsible lender,” said Bartlett. “It failed to undertake regular fee reviews, and invest in adequate systems, processes and controls to ensure it complied with the law.
“Holding banks accountable is an important part of the Commission’s ongoing work to ensure compliance with consumer credit laws and to ensure people are able to borrow money safely and fairly.”
Mark Wilkshire, CEO of the bank said: “We take our responsibilities to customers very seriously, and we regret that some of our historical practices did not meet the standards required. We identified the issue, self-reported it to the commission, and have worked hard to put things right for affected customers, both present and past. We’re committed to doing better for our customer-owners.”
He added: “We are now in the final stages of remediating all impacted customers affected by the historical issues.
“The Co-operative Bank has co-operated with the Commerce Commission’s investigation. Having admitted the breaches, the matter will now progress to a hearing at which the Court will determine the appropriate penalty.
“The commission and the Co-operative Bank are aligned on a recommended penalty amount. The Co-operative Bank has previously provided for potential penalties, so it is not expected to have an impact on the Bank’s results for the financial year to 31 March 2026.”
