Court finds bank's fee reviews failed Credit Contracts and Consumer Finance Act standards
On 31 March 2026, the High Court ordered The Co-operative Bank to pay $2.482m for charging unreasonable consumer credit fees.
In Commerce Commission v The Co-operative Bank Limited [2026] NZHC 815, Justice Heine of the Wellington High Court imposed the penalty after the bank admitted a series of contraventions of the Credit Contracts and Consumer Finance Act 2003 (CCCFA).
The breaches centred on 12 fees that either exceeded the bank's own cost assessments, rested on inadequate fee reviews, or faced no CCCFA compliance review at all. The court identified three distinct categories of conduct: fees the bank set above its own contemporaneous assessment of transaction-specific costs; fees grounded in inadequate assessments; and fees Co-operative never reviewed for CCCFA compliance.
The 12 affected fees included Home Loan Establishment ($350), Personal Loan Establishment ($200), Vehicle Loan Establishment ($200), Overdraft Facility ($3.50), Early Repayment ($100), Security Discharge ($75), Mortgage Discharge ($50), Home Loan Variation ($100), Restructure ($200), Revolving Credit Facility ($7.50), Rates Demand ($50), and Cash Advance ($2) fees in respect of online banking transactions.
The pecuniary penalty period ran from 20 December 2019 to 30 November 2021 for most fees, and to 27 February 2022 for the Security Discharge fee. During that period, approximately 28,261 customers suffered overcharges totalling between $1.3m and $2m, equating to per-customer overcharges of between $44.90 and $69.12.
The court set a starting point of $3.65m, anchored to an agreed maximum penalty of $7.2m derived from one penalty of $600,000 per fee. While the parties agreed that Co-operative did not set out to breach the CCCFA, Justice Heine described the contraventions as sitting at "the more serious end of the range of conduct for such breaches," noting that compliance failures persisted over an extended period and reflected a fundamental failure within Co-operative to appreciate what the fees provisions required.
The court then applied a 32 percent discount to the starting point, producing the final $2.482m penalty. The Commerce Commission submitted that Co-operative's conduct exceeded the baseline standard warranting its standard 30 percent discount. The higher discount recognised the bank's self-reporting of its breaches, payment of substantial sums to affected customers, and further remediation conducted after the filing of the proceeding.
The court declared s 41 breaches in respect of all 12 fees, and also declared breaches of s 9C and s 45 of the CCCFA. The s 9C declaration, which governs responsible lending, reflected the admitted inadequacy of Co-operative's compliance programme and fee-setting practices. The s 45 declaration addressed Cash Advance Fees charged in respect of ATM transactions, which exceeded the amount payable by Co-operative to third parties.
No aggravating factors applied. Specific deterrence was not a particular concern, as Co-operative had already self-identified the issues through its 2021 fee review, implemented new systems, processes, and controls, including personnel changes, and fully remediated affected customers. General deterrence remained relevant given the bank's size, resources, and position of influence within the industry.
The penalty represented seven percent of the bank's net profits during the penalty period, before accounting for remediation costs. The court determined that figure was sufficient to contribute to deterring others from risking non-compliance.
