ASB Bank Limited (ASB) has admitted to the Commerce Commission that it failed to provide sufficient systems and processes to ensure that it could give the required information to over 73,000 home and personal loan customers who tweaked some details in their loans.
The self-reported failures occurred when the bank did not consistently follow its standard operating procedure for customers changing relevant repayment date, amount, and frequency of their existing home loan agreements either in a branch or over the phone. As a result, some customers might not have received information about the changes when variation disclosure was required by the Credit Contracts and Consumer Finance Act (CCCF Act).
ASB has entered into a settlement with the Commerce Commission, repaying $8.1 million to customers who may have been affected by the breach of the bank’s lender responsibilities under the CCCF Act.
Commerce Commission chair Anna Rawlings reminded lenders to exercise the care, diligence, and skill of a responsible lender in all their dealings with borrowers.
“In this case, ASB’s responsible lending failures had the potential to affect a large number of borrowers entitled to receive key information when they made changes to their loans, including information about how the change impacted their overall obligations under their loans,” Rawlings said.
“Lenders need not only to make sure that they understand their obligations under the CCCF Act, but also that they have robust internal processes in place to meet those obligations.”
A copy of the settlement agreement can be found on the Commerce Commission’s website.