FMA files civil proceedings against Kiwibank for false or misleading representations over fee waivers

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko has filed High Court civil proceedings against Kiwibank for making false and/or misleading representations, under the fair dealing provisions of the Financial Markets Conduct Act (FMC Act).

Kiwibank’s general terms and conditions provided that customers would not pay transaction fees on their accounts if those customers also had a home loan from Kiwibank. However, between 1 September 2005 and 31 March 2020, some 35,000 of Kiwibank’s home loan customers did not have fee waivers applied to their accounts and were overcharged a total of $1,172,639.94.

As the FMC Act came into force from 1 April 2014, the FMA’s proceedings can only cover conduct from that date onwards, capturing some 19,000 of the total affected customers and overcharged fees totalling $576,809.66.

Kiwibank’s knowledge and self-reporting

In June 2018 the FMA and the Reserve Bank of New Zealand commenced their joint conduct and culture review of NZ registered banks. Banks were asked to provide details of any work underway to remediate any identified issues where bank conduct has resulted in detrimental outcomes for customers.

Following publication of the findings from the joint review, the FMA continued to ask banks to inspect their systems for issues. Kiwibank first identified the affected customers in or around August 2019, advised its board of the issue in October 2019 and reported the issue to the FMA shortly after.

The steps taken by Kiwibank after it discovered this problem were relevant to the FMA’s enforcement response. However, the nature of the underlying conduct will always be the driving factor in assessing the appropriate response, and the FMA considered the alleged conduct in this case warranted civil proceedings. Karen Chang, FMA Acting General Counsel, spoke to the FMA’s expectations and the importance of self-reporting issues in a recent speech.


In May 2021, Kiwibank commenced efforts to remediate all affected customers. The remediation included the amounts overcharged, plus use-of-money interest. The FMA has been advised that remediating customers is almost complete and will continue to request progress reports from Kiwibank.

The FMA is seeking a declaration that Kiwibank contravened a fair dealing provision of the FMC Act and an order that Kiwibank pay a pecuniary penalty to the Crown and costs.

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