Kiwibank has been warned by the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko for failing to apply fee waivers to certain joint account customers.
Between approximately March 2005 to November 2024, different versions of Kiwibank's Fees and Limits brochures represented that customers would not be charged transaction fees on certain accounts if they were under 18 or 19 years of age or over 65.
However, since at least 2011 Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not.
FMA's Executive Director for Response and Enforcement Louise Unger said: "The responsibility is on financial service providers to clearly and accurately communicate their fees, as well as ensure that they charge fees in line with what they have promised. It is also important that financial service providers have appropriate policies, procedures and controls in place to identify and address any fee-related issues in a timely fashion.
"We encourage all customers to raise concerns with their financial services provider if they notice any unexpected fees."
Kiwibank was first alerted to the issue by a customer complaint in June 2023. In December 2023 a Kiwibank staff member identified the potential for the issue to be more widespread and not limited to a single customer. The issue was subsequently investigated and validated, leading to Kiwibank making a self-report to the FMA in August 2024.
"In this case, Kiwibank overcharged 8,663 customers a total of $912,053.79 between July 2011 to November 2024. For the approximately 10-year period post 1-April 2014, which is when the Financial Markets Conduct Act 2013 (FMC Act) came into force, Kiwibank overcharged 6,400 customers a total of $747,000. This amount and duration is not insignificant," said Louise Unger.
"The FMA is satisfied that, for the period since the FMC Act has been in force, the charging of the transaction fees in the account statements issued to affected joint account customers was, or was likely to be, a breach of the fair dealing provisions of the FMC Act because it amounted to false or misleading representations that Kiwibank had the right to charge these fees when in fact it did not.
"There were two main root causes for the issue. First, a lack of common understanding across Kiwibank about whether, and how, the fee waiver should apply to joint accounts. Second, a system design limitation where the age-based fee waivers could only be applied based on the primary account holder's age.
"We recognise Kiwibank's cooperation and proactive effort to address the issue, including notifying the FMA and remediating impacted customers (including use-of-money interest). However, our view is that, in this instance, the issue could have been identified earlier with better product governance and internal controls," said Louise Unger.
This warning serves to inform the public and market about a matter directly related to fair dealing, which is a key focus area for the FMA as outlined in the recently published 2025 Financial Conduct Report. It also helps maximise the deterrent effect of the regulatory action. This promotes the confident and informed participation of investors and consumers in the financial markets, a key function of the FMA.
