The National Party is being accused of putting the needs of banks before everyday Kiwis after introducing legislation that could mean two big Australian-owned lenders avoid paying millions of dollars in refunds.
One customer said the amendment to lending laws would allow the banks to get off “scot-free” while the minister in charge said it simply allowed the courts to have more discretion in settling disputes.
The Credit Contracts and Consumer Finance Act (CCCFA) passed its first reading in Parliament last week and included a retrospective amendment relating to consequences for historical disclosure breaches by lenders.
An investigation by the Commerce Commission had found two banks did not disclose the necessary information regarding customer loans. It meant the banks were potentially liable to refund millions of dollars in fees and interest.
‘We should just be able to trust our bank’
Lawyer Scott Russell, acting on behalf of those taking the class action, said the omission regarded “core business” for the banks.
“It’s simple stuff. It’s disclosure rules that allow ordinary New Zealanders to understand their financial position,” Russell said.
Anthony Simons, a small business owner, was among the 170,000 customers who’ took legal action against ANZ and ASB banks.
“We’re just a hardworking Kiwi family trying to pay off our mortgage, struggling sometimes, and we should just be able to trust our bank that they’re going to do the right thing in disclosing the right information,” Simons said.
But, after four years battling through the courts, the Government last week passed the first reading of the legislation which changed the rules — retrospectively.
Banks entitled to ‘judicial fairness’ – Minister
The Minister for Commerce and Consumer Affairs, Scott Simpson, said the bill before Parliament did not affect the class action.
“What it does is it gives the courts the ability to use their discretion about what will be a fair and equitable outcome to the case,” he said.
“Banks, no matter what you may or may not think of them, are surely entitled to the same judicial fairness as any other entity or person.”
A Cabinet paper by the minister released last month highlighted the class action against the banks, adding that “addressing these concerns through retrospective legislation is likely to attract criticism”.
“Well, there will be criticism because it is retrospective and retrospective legislation is unusual but not completely unknown in our political system,” Simpson said.
Russell claimed it was unfair.
“We’ve taken it right through to the Supreme Court and, right where we’re getting to crunch time, the banks have contacted their mates in the National Party who have agreed to potentially wipe these refunds. It’s hundreds of millions of dollars,” he said.
Possible changes ‘don’t take any rights away from consumers’ – banks
ANZ and ASB Bank said the proposed amendments to the bill would not halt the current class action – or future cases.
In a statement to 1News, ANZ said the proposed amendments “will not stop the current class action progressing, nor will it prevent potential future cases”.
“They will simply confirm that when considering these cases, the court has discretion to decide what a fair outcome should be. This change does not remove the rights and protections of consumers.”
ASB Bank, meanwhile, told 1News that the potential changes “don’t take any rights away from consumers, and will not prevent the current court case, or any future cases, from proceeding”.
“They simply clarify a confusing piece of legislation and confirm that the court has jurisdiction to decide on an outcome that is fair and reasonable.”
Simpson added that, currently, for cases that occurred between 2015 and 2019, the courts could only hand down one penalty.
“And that is a full refund of all interest and all fees, no matter how small or minor the error or omission was,” he said.
But Russell said penalties “are clear under the legislation”.
“All of a sudden, those penalties are being wiped out and replaced with something that’s not clear which is what is a reasonable penalty.”
While all three coalition parties supported the bill at its first reading, NZ First had concerns about the retrospective aspect and wanted to hear more official advice and public feedback before deciding if it would back the bill entirely.
The issue would now be considered by a Parliamentary select committee.
