Kiwibank will pay out $5.2 million to over 48,000 home loan customers after it reached a settlement agreement with the Commerce Commission over system failure.
Kiwibank admitted that it failed to act with diligence and standard of care expected of a responsible lender. Therefore, it failed to comply with the standards required under the Credit Contracts and Consumer Finance Act.
The Credit Contracts and Consumer Finance Act requires lenders to act responsibly in all their dealings with their customers, including ensuring that they have appropriate systems and processes in place to manage customer accounts.
“While Kiwibank had policies in place for disclosing more complex changes, its system and process failures affected the information it provided to some customers when they made simple changes, such as re-fixing interest rates or changing repayment amounts,” said Commerce Commission Chair Anna Rawlings, as reported by NZ Herald.
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In August 2019, Kiwibank reported to the commission that it had failed to provide robust home loan variation disclosure policies, procedures, and systems for certain types of home loan variations before April 2019.
“We proactively identified the issue and reported it to the Commerce Commission, and we have worked constructively since then to resolve it,” said Kiwibank chief executive Steve Jurkovich, as reported by Stuff.co.nz.
“We apologise to customers and would like to reassure them that our systems and processes have been improved to ensure we deliver good customer outcomes.”
Jurkovich said the bank would soon contact customers who were due payments under the agreement.