The New Zealand Financial Markets Authority has filed High Court civil proceedings against Kiwibank for making false and/or misleading representations to customers over transaction fees.

The bank’s terms and conditions said home loan customers would not pay transaction fees on their accounts, but for nearly 15 years – between September 2005 and March 2020 – around 35,000 Kiwibank customers did not have fee waivers applied to their accounts and were overcharged a total of NZ $576,809.

The overcharging came to light as a result of the joint FMA/RBNZ conduct and culture review of NZ banks, following the Hayne report, when banks were asked to inspect their systems for issues. Kiwibank identified the problem around August 2019, reported it to the Board in October 2019 and to the FMA shortly after.

In May this year, the bank began to remediate affected customers and says that work is almost complete. However, the FMA is seeking a declaration that Kiwibank contravened a fair dealing provision of the FMC Act and an order that Kiwibank pay a pecuniary penalty to the Crown and costs.