Commerce Commission credit director notes lack of regular fee reviews or sufficient systems
The Commerce Commission has called attention to Co-operative Bank Limited’s admission to breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and remediation of $7.225m to 48,249 customers for charging higher fees than it should have.
“Co-operative Bank’s conduct fell short of what we would expect from a responsible lender,” said Sarah Bartlett – director, credit at the Commerce Commission – in a news release. “It failed to undertake regular fee reviews, and invest in adequate systems, processes and controls to ensure it complied with the law.”
The Commerce Commission’s news release provided context for the proceedings. The bank first alerted the Commerce Commission to its concerns regarding the fee amounts it had charged customers.
The Commerce Commission began investigating the bank to obtain more information. Upon wrapping up its investigation, it found that the bank charged 12 unreasonable fees across its home loan and personal loan lending products, with most charged from 6 June 2015 to 30 November 2021.
The Commerce Commission commenced CCCFA proceedings in connection with its findings of unreasonable fees. The bank and the Commerce Commission then executed a settlement agreement. The Commerce Commission noted its intention to ask the High Court to fix the appropriate pecuniary penalty.
In the news release, Bartlett stressed the importance of the bank’s remediation efforts for impacted customers. Bartlett added that customers should be able to trust that a bank always fulfills its responsibility to charge reasonably.
“Charging unreasonable fees doesn't just erode trust in the banking sector – it has a direct and tangible impact on consumers’ wallets, often hitting those least able to absorb unexpected costs,” Bartlett said in the news release.
Bartlett explained that the Commerce Commission seeks to hold banks accountable, promote compliance with consumer credit laws, ensure that customers can safely and fairly borrow money, and reach real outcomes for those affected by breaches.
In its news release, the Commerce Commission listed the bank’s 12 fees that it deemed unreasonable:
