The Bank of New Zealand has received a warning from the Commerce Commission over its likely failure to meet responsible lending requirements and give borrowers timely and accurate information.
In late 2018, the bank reported 15 potential breaches of the Credit Contracts and Consumer Finance Act 2003 to the Commission.
The probable breaches related to some home loans, personal loans, credit cards and overdrafts which were entered into or changed between June 6, 2015 and February 24, 2017. This affected 11,956 customers.
On Wednesday, the Commission said following an investigation, it had issued a warning to the BNZ that it was likely it failed to meet its obligations under the Act.
Commerce Commission chair Anna Rawlings said the bank made disclosure errors and didn't provide disclosure information to borrowers in a timely manner.
"In some cases, BNZ provided incomplete or inaccurate disclosure, and in other cases disclosure was provided a day, a few days, or as many as seven months after the information should have been provided to borrowers," Rawlings said.
"We expect lenders to regularly audit their systems to make sure that they can comply with consumer credit law, or quickly identify problems if they arise, fix them and provide appropriate remediation to borrowers," she added.
In late 2018, BNZ refunded around $3.8 million in interest and fees to borrowers affected by these issues. In an announcement on December 5, 2018, BNZ said around 10,000 customers. would receive a refund. The amount varied according to circumstances, but the average refund was $375.
Rawlings said BNZ cooperated with the commission throughout the investigation. In September, the bank refunded $350 to each affected borrower. In total, the bank paid over $1 million in refunds to over 2300 customers.
"BNZ has identified these matters itself and reported them to the Commission, made remediation payments to its customers and made system changes to reduce the risk of issues like this arising in the future.
"Taking into account those steps, and consistent with our enforcement response guidelines, we have decided that it is appropriate to issue a warning to BNZ for this conduct," Rawlings added.
BNZ apologised to affected customers and said it deeply regrets the errors.
"We hold ourselves to a high standard and in this case, we missed the mark," executive customer, products and services Dan Huggins said.
"While no customer was out of pocket or raised any concerns with us, it’s possible people may have been confused by the errors in their documents, so we’re putting it right," Huggins added.
A BNZ spokesperson told Newshub that the bank was offering $350 as a goodwill payment to customers affected by the likely disclosure breaches. While most customers had received it, a small number of customers would receive the payment and letter over the next couple of days.
"The letter will also tell them what the issue was - there's a bit more information for customers who are directly affected," the spokesperson said.