The Co-operative Bank has admitted to charging “unreasonable fees” over several years and has repaid nearly 50,000 customers a combined total of $7.225 million.
It comes after the bank entered into a settlement agreement with the Commerce Commission following an investigation launched when the bank self-reported the breaches.
There were concerns about the fee amounts the bank was charging customers.
The bank said it cooperated with the Commission throughout the investigation.
The Commission said Co-Operative Bank charged unreasonably for 12 fees across its lending schemes, including home loans, personal loans, home loan establishment fees, and overdraft facility fees.
Most customers were charged the fees between June 6, 2015, and November 30, 2021.
The bank admitted to charging higher fees and remediated $7.225 million in fees for 48,249 customers.
Commerce Commission director for credit Sarah Bartlett said it was the responsibility of banks to charge reasonable rates so customers “should be able to trust that this is always the case”.
“Charging unreasonable fees doesn’t just erode trust in the banking sector – it has a direct and tangible impact on consumers’ wallets, often hitting those least able to absorb unexpected costs.”
Bartlett said the bank’s conduct “fell short” of what was expected from a responsible lender.
“It failed to undertake regular fee reviews and invest in adequate systems, processes and controls to ensure it complied with the law.
“Holding banks accountable is an important part of the Commission’s ongoing work to ensure compliance with consumer credit laws and to ensure people are able to borrow money safely and fairly.”
The Commission’s claims will now go to the High Court, which will decide the pecuniary penalty.
Both the bank and the Commission were aligned on a recommended penalty amount.
Responding to the Commission’s announcement today, Co-operative Bank CEO Mark Wilkshire said: “We take our responsibilities to customers very seriously, and we regret that some of our historical practices did not meet the standards required.
“We identified the issue, self-reported it to the Commission, and have worked hard to put things right for affected customers, both present and past. We’re committed to doing better for our customer-owners.”
He said the bank was in the final stages of remediating all affected customers.
The bank said it had previously provided for potential penalties, and it was not expected to have an impact on its annual results.
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