The bank could be asked to pay up to $125m over a coding error in a system
ANZ is appealing its High Court defeat in a mortgage disclosure class action, reported the NZ Herald.
The court ruled last month that the bank violated its disclosure obligations under the Credit Contracts and Consumer Finance Act (CCCFA) when it issued loan variation letters with inaccurate repayment information to approximately 17,000 customers. The bank could be asked to pay up to $125m.
The inaccuracy was caused by a coding error in a loan calculation system between 2015 and 2016. ANZ claimed that as a result, mortgages were underpaid by an average of $2 a month.
The bank informed the Commerce Commission of the error and paid out over $35m to customers. However, customers sought to have loan-related borrowing expenses, including interest, that were incurred during that period reimbursed as well.
High Court justice Geoffrey Venning determined that customers would not be liable for these expenses. He found that some of the loans violated the Act in the mid- to late-2010s.
Russell Legal principal Scott Russell, who acted for the customers in the class action, said in a statement published by the Herald on 5 May that the judgment was “an important step in holding ANZ accountable under consumer protection legislation designed to ensure borrowers receive accurate information about their loans”.
However, ANZ claimed that the CCCFA was incorrectly applied in the court’s decision.
“We opposed the original claim because we felt strongly that the law was not intended to operate in the way the plaintiffs and the litigation funders suggested. We maintain that the potential consequences under the High Court’s interpretation of the law are disproportionate and not aligned with the purpose of the CCCFA or any actual harm caused”, said Antonia Watson, ANZ NZ’s chief executive, in a statement published by the Herald.
Watson added that the customers had actually paid less interest due to the error.
The class action also named ASB as a defendant. ASB agreed to settle for almost $136m, although it did not admit to any wrongdoing.
Per the Herald, the government is revising the CCCFA version that was in force from 2015 to 2019 to indicate that the default penalty for a lender sharing inaccurate loan information is not for the lender to repay the borrower all the borrowing expenses they incurred for the duration of the breach. The modified Act will not cover the ANZ class action.
