Kiwibank has entered into a settlement agreement with the Commerce Commission after reporting that it failed to have in place robust home loan variation disclosure policies, procedures and systems.
In a settlement dated 27 August 2020, Kiwibank admitted that it had failed to act with the care, diligence and skill of a responsible lender and agreed to make remediation payments to over 48,000 borrowers, totalling $5.2 million.
Commission Chair Anna Rawlings said, “Under the Credit Contracts and Consumer Finance Act 2003, lenders must act carefully and responsibly in all their dealings with their customers. This includes having appropriate systems and processes in place to manage customer accounts and to support compliance with the lender’s legal obligations to its customers”.
“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 Ms Rawlings.
Kiwibank reported to the Commission in August 2019 that it failed to have in place robust home loan variation disclosure policies, procedures and systems for certain types of home loan variations in the period before April 2019.
Customers eligible for remediation will be contacted by Kiwibank and any enquiries should be directed to the bank.
Lenders entering into or varying consumer credit contracts after 6 June 2015 are required to comply with the lender responsibility principles, as set out in the Credit Contracts and Consumer Finance Act.
The lender responsibility principles require lenders to exercise the care, diligence, and skill of a responsible lender always, including during all subsequent dealings with borrowers and guarantors.
They must also treat borrowers reasonably and with respect.