ASB begins compensation payments for customers after Commerce Commission deal

ASB has begun making compensation payments to borrowers who had loans with the bank between June 2015 and July 2019.

The bank has sent emails entitled “An important message about a payment to your account” to customers entitled to the payments of either $68 or $135, depending on when they were charged.

It follows a deal done with the Commerce Commission.

“The amounts payable were agreed with the Commerce Commission,” the bank said in its emails to customers.

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People with affected loans drawn down prior to June 6, 2015, would receive $68, the bank said.

People with affected loans drawn down on or after that date would receive $135.

ASB told customers the refunds were being made because it “may” have failed in all cases to give written notice to customers of charges levied after they requested changes to their loans.

“In recognition that written confirmation may not have been provided, we’re making payments to impacted customers,” it told affected customers.

The bank said it had updated its systems to ensure each time a borrower asked to make a change to any loan, they would receive written confirmation of the details of the change.

ASB has been contacted for comment.

Banks have been under deeper scrutiny from regulators since 2018.

After bank scandals in Australia, the Reserve Bank and the Financial Markets Authority did a “conduct and culture” review of banks, culminating in the release of a report detailing bank failures and underinvestment in New Zealand.

It also revealed that banks were very slow to make refunds to customers when it discovered it had overcharged them.

When the Reserve Bank and Financial Markets Authority (FMA) published their joint Bank Conduct and Culture Review report in November 2018, they said there had been more “more than 50” recent big bank errors which had left their customers out of pocket to the tune of tens of millions of dollars.

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” by banks was 58, and the number of customers impacted was 566,378.

In 2018, BNZ refunded $3.8m to more than 10,000 customers because of problems with its loan documents.

Also in 2018, ANZ paid home loan customers $10m after loan interest mix-up. Last year, it had to pay customers a further $29.4m after admitting a breach of its responsible lending obligations in 2015 and 2016.

In 2019, Westpac agreed to refund fees to 93,000 customers being overcharged $7m.

Last year Kiwibank agreed to pay more than 48,000 borrowers remediation totalling $5.2m, after admitting it failed to act with the care, diligence and skill of a responsible lender, the Commerce Commission says.