Kiwi customers of ANZ and CBA-owned ASB have launched a class action lawsuit against the two banks under the Credit Contracts and Consumer Finance Act.

The class action suit launched on Wednesday is being funded by Australian litigation funder CASL and New Zealand litigation funder LPF Group. The class action group's solicitor is Scott Russell, a former senior legal counsel at the Commerce Commission.

It follows settlements being reached by both banks with the Commerce Commission over breaches of section 9C of the CCFA relating to responsible lending practices.

In ANZ's case it was the largest settlement any single New Zealand bank has reached with the Commission, and resulted in the bank paying out a total of over NZ$35 million after it admitted mis-stating the amount of interest on loans between May 2015 and May 2016. It blamed this on a coding error within a loan calculator used by frontline staff.

ASB paid out over NZ$8 million after admitting it failed to ensure its systems and processes were sufficient to ensure the required disclosure information was given to more than 73,000 customers when they made changes to their loans.

Now the class action plaintiffs are seeking "full repayment of all the interest and fees paid by ANZ and ASB customers on their loans which they are not liable to pay", citing section 99 of the CCCFA, which requires a lender which has breached disclosure rules to repay all the interest and fees charged while it was in breach.

Unusually for New Zealand, it is also an "opt-out" class action, following a 2019 court judgment that ruled such class actions are permitted. Affected customers could number over 150,000.