BNZ warned over lending breaches

Bank of New Zealand has been warned by the Commerce Commission over ‘‘likely’’ responsible lending breaches involving nearly 12,000 borrowers.

The commission investigated after BNZ approached it in 2018 to self-report 15 potential breaches of the CCCF Act to the commission.

The potential breaches related to certain home loans, personal loans, credit cards and overdrafts given to customers between June 6, 2015, and February 24, 2017.

But the commission said BNZ likely breached responsible lending and disclosure obligations in thousands of instances.

There were 11,956 affected customers, the commission said.

‘‘In the commission’s view, BNZ failed to meet the requirements of the Credit Contracts and Consumer Finance Act 2003 [CCCF Act] including by making errors when delivering information required by the act,’’ it said.

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.

BNZ’s Dan Huggins, executive for customer, products and services, said the bank had decided to make goodwill payments of $350 to every customer affected.

‘‘We sincerely apologise to every customer affected by this, and we deeply regret the errors. We hold ourselves to a high standard and in this case, we missed the mark.’’

Commission chair Anna 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.’’

In late 2018 BNZ refunded approximately $3.8 million in interest and fees to borrowers affected by these issues, she said.

BNZ had co-operated with the commission throughout the investigation, and in September 2020 it refunded $350 to each borrower affected by its likely failure to meet responsible lending obligations, the commission said, adding up to a total refund of more than $1m to more than 2300 affected borrowers.

While the commission believed the bank had likely breached the law, it said only the courts could decide whether a breach of the law had in fact occurred.

It said the purpose of a warning letter was to inform the recipient of the commission’s view, to suggest a change in the recipient’s behaviour, and to encourage future compliance with the law.

‘‘We sincerely apologise to every customer affected by this, and we deeply regret the errors.’’

BNZ’s Dan Huggins