TSB to repay customers after miscalculating break fees

by Krizzel Canlas15 Dec 2017
TSB Bank has signed a settlement agreement with the Commerce Commission relating to an error in its early repayment interest calculation (or “break fee”) for fixed rate home loans. 

These errors led to some customers being overcharged and some being undercharged. TSB self-reported the error in April 2016 with a full report on actions and investigations that had been done to that date and has been working closely with the Commerce Commission since then to reach an agreement.

TSB will repay approximately 2800 customers who were inadvertently overcharged as a result of an incorrect break fee calculation when customers broke their fixed rate home loan contracts between 1 October 2008 and 14 February 2016.

Commissioner Anna Rawlings said she was pleased that TSB had reported itself to the Commission once the issue was identified.

“TSB is paying refunds to affected customers and is writing to customers who are entitled to a refund. It is also using its website to alert customers that it had inadvertently overcharged break fees on some affected loans,” Rawling said.

“TSB has fully co-operated with our investigation and it says the break fee calculation errors were unintentional. It will certify to the Commission that the necessary customer refunds have been made,” she said.

TSB CEO Kevin Murphy said: “As a financial institution we regularly assess our products and services that have calculation requirements.”

"For this reason, it is deeply disappointing to find a miscalculation that resulted in some customers being overcharged,” he said.

TSB will not be seeking to claim money from those it undercharged.

TSB will contact customers who are entitled to a refund. Refunds that are not claimed will be held in trust for a maximum of 12 months, at which time any unclaimed refunds will be donated to the National Building Financial Capability Charitable Trust as agreed with the Commerce Commission.

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