Commission obtains a further $29.4 million for ANZ customers after responsible lending breach
Published02 Mar 2020
ANZ Bank New Zealand Limited (ANZ) has signed a settlement agreement with the Commerce Commission admitting a breach of its responsible lending obligations, and has also agreed to pay customers a further $29.4 million.
In the Commission’s first completed responsible lending case, the bank has admitted that when it provided loan variation information to more than 100,000 customers it failed to take the necessary care required of a responsible lender.
ANZ have previously paid affected customers around $6 million as a result of the error. After investigating, the Commission was able to obtain a further $29 million for affected customers. The settlement is the largest the Commission has had with a single bank.
As part of the settlement, ANZ has agreed to admit in High Court proceedings that it engaged in conduct that breached its responsible lending obligations. The Commission is now seeking a High Court declaration that the bank’s conduct breached the Credit Contracts and Consumer Finance Act (CCCF Act).
In May 2018 ANZ publicly confirmed that it had misstated the amount of interest on loans from 30 May 2015 until 28 May 2016 as a result of a coding error within a loan calculator used by its frontline bank staff. The issue affected personal and home loan customers who agreed with the bank to vary their loans. ANZ self-reported the issue to the Commission in 2017.
Under the CCCF Act, every lender must exercise the care, diligence and skill of a responsible lender in all initial and subsequent dealings with borrowers.
Customers covered by this settlement will be contacted directly by ANZ by physical letter.
As the matter is before the Court, the Commission will make no further comment at this time.
Lender Responsibility Principles
Lenders entering into or varying consumer credit contracts after 6 June 2015 are required to comply with the lender responsibility principles, as set out in the CCCF Act.
The lender responsibility principles impose obligations on lenders to exercise the care, diligence, and skill of a responsible lender at all times, including when advertising, before entering into a loan, and during all subsequent dealings with borrowers and guarantors.
These principles apply not only to consumer loans, but also to credit-related insurance contracts, guarantees and buy-back transactions. Lenders must act carefully and responsibly at all times and treat borrowers reasonably and with respect.