ASB, ANZ face lawsuit over failures

ANZ and ASB are facing a class action lawsuit from people with mortgages and personal loans who claim they were wrongly charged millions in interest and fees.

The two banks were yesterday served with notice of the legal action, said Auckland lawyer Scott Russell, of Russell Legal.

The move followed both banks admitting in settlements with the Commerce Commission Te Komihana Tauhokohoko that they had failed to take the necessary care required of a responsible lender, said Russell, who was taking the case with funding from litigation lenders CASL and LPF Group.

ASB admitted in May that it had failed to exercise the care of a responsible lender by breaching the lender responsibility principles under the Credit Contracts and Consumer Finance Act. The bank said it would make payments of $8.1 million to about 73,000 people who had home and personal loans with it between June 2015 and July 2019. Borrowers received payments of between $68 to $135.

In March the previous year, the country’s biggest bank, ANZ, admitted it had let down more than 100,000 customers by failing to take the necessary care required of a responsible lender. In a settlement with the commission, it agreed to pay customers a further $29.4m after admitting a breach of its responsible lending obligations between June 2015 and May 2016, having previously paid affected customers about $6m.

Russell said neither of the two settlements with the commission prevented the class action from going ahead. He said customers had only received a fraction of what they were entitled to.

‘‘The communications the banks sent to customers advising them of remediation payments were extremely vague and actively dissuaded customers from querying the payments or taking further action, using words like ‘‘there’s nothing further you need to do’,’’ Russell said. ‘‘If a bank fails to comply with its disclosure obligations, it is not legally entitled to charge interest or fees on the affected loan until the failure is remedied.’’

The banks must refund customers, he said.

The case would be run on an opt-out basis, which meant all those who had affected loans affected would be included as plaintiffs, unless they asked to be left out of the lawsuit.

Russell said anyone who received a payment from the banks for the breaches would be among those faced with the choice of opting out, or staying in.