Commerce Commission and Co-operative Bank reach settlement over unreasonable fees self reported by the bank

The Commerce Commission has reached a settlement with The Co-operative Bank after the bank self-reported the over charging of fees between 2015 and 2021, which have seen it reimburse 48,249 customers $7.225 million.

The Commission says with civil proceedings filed, the issue now heads to the High Court, which will decide Co-operative Bank's pecuniary penalty.

"Co-operative Bank 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," Commission Director of Credit Sarah Bartlett says.

"Co-operative Bank’s conduct fell short of what we would expect from a responsible lender. It failed to undertake regular fee reviews, and invest in adequate systems, processes and controls to ensure it complied with the law," Bartlett says.

Co-operative Bank CEO Mark Wilkshire says the bank has admitted breaches of the Credit Contracts and Consumer Finance Act (CCCFA) relating to some historical credit fees generally charged under consumer credit contracts up to November 2021.

"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," says Wilkshire.

"We are now in the final stages of remediating all impacted customers affected by the historical issues."

"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," Wilkshire says.

Co-operative Bank's March 2025 year annual report said profitability was impacted by a $4.4 million provision in relation to some historic credit fees, set under the CCCFA.

"Over 2022 and 2023, we voluntarily reimbursed more than $5 million to our customers in relation to these historic credit fees. We continue to work with the Commerce Commission to finalise this matter. This provision means that our net profit before rebates and tax is $12.5 million. Our underlying result, excluding the CCCFA provision, was $16.9 million – 16 per cent down on the previous financial year," the bank said.

In 2022 Co-operative Bank said it had provisioned $6.3 million in its annual financial results to cover potential compliance and remediation costs related to the CCCFA. Last year the bank said it had provisioned for a further $4.4 million to cover additional matters identified.

The background below is provided by the Commerce Commission

The Commission opened an investigation into Co-operative Bank after the bank first alerted the Commission to the concerns it had about the fee amounts it had charged customers. The Commission has obtained further information during the subsequent investigation.

A full list of relevant fees which the Commission considered to be ‘unreasonable’ is below:  

Home Loan Establishment Fee
Restructure Fee (also referred to in the relevant period as the Home Loan Top Up Fee)

Home Loan Variation Fee

Revolving Credit Facility Fee

Early Repayment Fee (also referred to in the relevant period as the Early Full/part Repayment Fee)

Security Discharge Fee (also referred to in the relevant period as the Full or Partial Mortgage Discharge Fee)

Mortgage Discharge Fee (also referred to in the relevant period as the Mortgage Discharge Fee (where no loan balance) Fee)

Rates Demand Fee

Personal Loan Establishment Fee

Vehicle Loan Establishment Fee

Overdraft Facility Fee

Cash Advance Fee (also referred to in the relevant period as the Fair Rate Credit Card Cash Advance Fee)