Commonwealth Bank, ANZ face NZ class action over fees

The class action against the two big banks’ New Zealand units may seek hundreds of millions of dollars in refunds to customers.

New Zealand's former prime minister Sir John Key is chairman of ANZ’s NZ unit, which is the subject of a new class action against it and CBA’s ASB. Picture: AAP

Commonwealth Bank and ANZ’s New Zealand units are ensnared in a new class action across the Tasman, with two litigation funders jointly involved in a case which may seek hundreds of millions of dollars.

The banks’ NZ arms – ASB for CBA and ANZ Bank New Zealand – were to be served court documents on Wednesday relating to allegations they breached consumer protection laws and didn’t properly refund more than 150,000 customers.

The class action is being jointly funded by Australia-based CASL and NZ’s LPF Group.

It is being brought under NZ’s Credit Contracts and Consumer Finance Act 2003, and the action centres on the banks’ alleged failure to fully refund home and personal loan customers interest and fees “they were not entitled to charge due to breaches of their disclosure”, the parties said in a statement.

“If the money paid by customers is not the banks’ to keep, then they should give it back. Not just a portion of it, but all of it,” said Anthony Simons, an ASB customer and representative class action plaintiff.

“ANZ and ASB think by admitting to breaking the law, the consequences don’t apply to them,” he said. “Hiring expensive lawyers and agreeing to significantly reduced payments with regulators means the banks have avoided repaying what they owe to their customers. Banks are the first to enforce the rules when they are owed money, yet they ask for leniency when they break the law.”

But an ANZ spokesman said it would defend the claim and believed it had fairly remediated customers over the matter.

“We understand this litigation relates to a historic loan calculator issue, although we have not yet seen a copy of the claim,” he said.

“This issue resulted in some customers underpaying their loans by an average of $NZ2 a month for a short time.”

ANZ’s spokesman noted the bank identified the issue and reported it to NZ’s Commerce Commission in 2017.

“ANZ carried out its own remediation and then a second remediation following a Commerce Commission investigation and settlement. More than $NZ35m has been paid to customers,” he said.

An ASB spokesman said the bank was aware of an action filed at the Auckland High Court, relating to a settlement agreed between the bank and the Commerce Commission, published in May.

“As this matter is now before the court, we won’t be making any further comment.”

Earlier this year, on matters relating to the latest class action, ASB entered into a settlement agreement with the Commerce Commission after admitting it failed to act as a responsible lender.

The bank had not made sure systems and processes were sufficient to ensure a required “variation disclosure” was given to more than 73,000 home and personal loan customer, when they made changes to their loans.

ANZ’s NZ operations had its Commerce Commission case closed last year after signing a settlement, which admitted a breach of responsible lending obligations. The bank also agreed to pay customers a further $NZ29.4 million.

CASL managing director Stuart Price labelled the latest class action “one of the most important” the firm had funded. “It goes to the heart of the huge power imbalance that exists between banks and their individual customers … extensive reviews into the culture and conduct of Australasian retail banks identified significant issues and a lack of accountability,” he said.

LPF group director Phil Newland mentioned a recent NZ Supreme Court decision that approved “opt-out class actions” for consumer-related claims, and said this matter should be pursued on the same basis.

The major domestic banks – which dominate the NZ market – have also faced the heat from class and regulatory actions in Australia.

In April, the corporate regulator alleged in the Federal Court that CBA overcharged customers for almost 10 years, despite assurances it would not charge access fees on accounts.

Slater and Gordon is also attempting to spearhead a class action against CBA relating to customers being sold junk insurance.

ANZ also had a run-in with NZ regulators in 2020 over incorrectly charging some customers twice for credit card insurance.

The class action against ASB and ANZ NZ is being managed by Scott Russell of law firm Russell Legal and barristers Davey Salmon QC and Ali van Ammers.