Kiwibank is being fined $1.5 million after self-reporting breaches of the Fair Trading Act to the Commerce Commission that led to 35,000 customers being overcharged $6.8 million.
Kiwibank was sentenced in the Auckland District Court on Tuesday. This came after the Commission prosecuted Kiwibank for 21 criminal charges under the Act for making misleading representations to its customers about its services, which Kiwibank didn't provide on the stated and agreed terms.
Commerce Commission Deputy Chairwoman Anne Callinan says Kiwibank's offending was serious, stemming from "a raft of failures" in Kiwibank’s systems.
"There were long-standing flaws in Kiwibank’s systems and processes that led to these breaches, some of which likely date back to Kiwibank’s inception in 2002," Callinan says.
"Banks must have processes in place to ensure consumers are getting a fair deal and consumers would reasonably assume that banks wouldn’t make errors of this sort."
"The Commission expects banks to make the necessary investment in the systems that support their compliance obligations so they get things right for consumers."
The problems were first identified by Kiwibank itself, and reported to the Commission. Kiwibank has been contacting and apologising to customers, and is paying out $9.2 million of remediation.
The Commission cites significant failures where Kiwibank didn't provide agreed services in five areas, for their customers. It says Kiwibank failed to:
- provide agreed discounts and interest-free periods to customers who had entered into package benefit agreements
- properly calculate customers’ regular repayments when customers requested changes to their loan in particular circumstances
- ensure that customers were switched to repaying loan principal, as well as making interest payments, at the end of agreed interest-only periods
- provide agreed discounts on the overdraft interest rates payable by home loan customers
- charge the correct amounts of various fees to certain loan customers
“These failures were caused by errors in Kiwibank’s electronic systems and a lack of quality assurance checks to make sure that staff knew how to carry out the processes required, and that these processes were being followed correctly,” Callinan says.
In a statement Kiwibank notes it self-reported to the Commission and admitted to the breaches, which were connected to the bank's work to proactively identify, investigate, and resolve historical errors.
"The errors occurred because some systems and processes related to credit products failed to deliver the promised benefits or pricing to certain customers. Kiwibank has carried out a remediation programme for affected customers and remediations will be completed by March 2025, if not complete already," the bank says.
"Throughout this process, our focus has been on correcting issues for our customers as quickly as possible. We apologise for the errors and are committed to continuing to build an even stronger New Zealand bank to help make more Kiwi better off," Kiwibank Chief Executive Steve Jurkovich said.
The Fair Trading Act charges related to overcharging since 2019. The maximum penalty a company can get is $600,000 for each breach under the Act. The Commission filed 21 charges, meaning Kiwibank potentially faced a fine worth millions of dollars. All charges were filed under sections 13(i) and 40(1) of the Fair Trading Act.
4 Comments
- One million seconds is a little over 11 days
- One billion seconds is a little over 31 years and 8 months
So in terms of a prison sentence, the former is a holiday, while the latter is a life sentence.
I hope people get this when I bitch about billionaires. But I expect most are so mathematically challenged they have no idea.
In case you were wondering about the implications ... This numerical phenomenon explains Trump.
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