Banking errors hit half-million Kiwis
More than half a million bank customers have experienced ‘‘recent’’ errors that have led to banks paying compensation, or taking some other ‘‘remediation’’ action.
When the Reserve Bank and Financial Markets Authority (FMA) published their joint Bank Conduct and Culture Review report in November, they said there had been ‘‘more than 50’’ recent big bank errors.
In all, around 431,000 customers had been affected in cases where the banks had worked out the financial costs of making good their mistakes.
But in response to an Official Information Act request, the FMA said the number of recent bank errors leading to ‘‘remediation’’ was 58, and the number of customers affected was 566,378.
The vast majority fell victim to ‘‘processing errors’’ resulting in inappropriate bank fees, or interest being charged, the FMA said.
The review report blamed errors on banks’ failure to adequately invest in systems.
The FMA said 496,102 customers experienced a ‘‘processing error or inappropriate or incorrect application of bank charges’’.
There were 40 large-scale processing errors that led to remediations. Customers had either been repaid or were owed just under $23 million.
The second-largest group of customers were the 68,960 who were sold products such as loans or insurance, but given ‘‘insufficient or incorrect disclosures’’.
The FMA said the cost of remediating those errors was $144,000, but earlier this month BNZ said it was refunding $3.8m to more than 10,000 customers because of problems with its loan documents.
BNZ said customers had not received their documentation quickly enough, or it was missing or contained incorrect information.
The FMA also identified two cases of ‘‘responsible lending’’ errors, affecting 204 customers, with an estimated $108,000 cost to remediate.
And, it said there were four cases of banks selling inappropriately designed financial products, or selling products that did not suit customers’ needs, involving 1112 customers. That would cost the banks involved an estimated $630,694 to fix.
The FMA said many of the remediations were ongoing, and the final number of customers affected could rise.
‘‘In many cases the impact of the issue was still being assessed by the banks, therefore the numbers and costs may not represent the final/exact impacts,’’ the FMA said.
Sometimes, the bank error goes in the customer’s favour.
Earlier this year, about 100,000 ANZ home, personal and commercial loan customers were told they had underpaid the interest on their loans because of a problem with a bank calculator back in 2016.
The estimated average impact per customer was relatively small, between $5 and $100, the review report said.
‘‘The majority of issues appear to have been caused by system or process weaknesses, or processing errors. It is concerning how relatively commonplace these problems are.’’
Fixing the repeated mistakes would require ‘‘prioritising investment, and should be an area of ongoing focus for banks beyond the conclusion of this review’’.
The New Zealand Bankers’ Association has accepted all the recommendations in the review report. Acting chief executive Antony Buick-Constable said the report was an opportunity for the industry to retain the confidence of its customers.