Banking Association on consumer credit changes
Earlier this week Nine to Noon touched on changes to legislation governing consumer credit. Kathryn spoke to Scott Russell, who's the lawyer leading a class action against two of New Zealand's biggest banks - ASB and ANZ - over disclosure breaches made between 2015 and 2019. He has concerns that a bill to amend the Credit Contracts and Consumer Finance Act would apply retrospectively, and has the potential to impact the legal action that's been underway since 2021. Currently lenders have to refund all fees and interest charged if they were in breach of disclosure laws; what's proposed would see the courts decide what is 'just' and 'equitable' in any breach. The New Zealand Bankers' Association has welcomed the amendment Bill, saying it tidies up the existing legislation to ensure that all breaches are treated the same as those currently. The Association's Roger Beaumont made a submission on the Bill yesterday to the Finance and Expenditure Select Committee and joins Kathryn.
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NZ Herald
18 hours ago
- NZ Herald
ASB joins ANZ in declining legal settlement proposal, as Winston Peters comes in to bat for them
On Wednesday, journalists received an email from the lawyers representing ANZ and ASB customers, detailing their proposed settlement. The email came through as the funders of the class action were making their case to parliamentarians for why they opposed the law change. Having worked on the class action for four years, they argued it was unfair for the Government to change the rules of the game now - after it had been lobbied by the banks. The retrospective law change could reduce the damages the customers, their lawyers and funders stand to receive from the legal action. ANZ responded straight after the lawyers made their settlement offer public on Wednesday, calling it a 'stunt intended to influence members of Parliament'. 'The litigation funders are worried that MPs have seen through their attempts to exploit a poorly drafted provision in the CCCFA and are desperate to shut down the strong public interest arguments in favour of the amendment,' ANZ said. It said its disclosure error had seen it undercharge customers an average of $2 a month over 12 months. 'There is no consumer harm. ANZ wrote off the amount it was owed and therefore put customers in a better position than had the issue never happened,' ANZ said. 'The proposed settlement appears to be primarily driven by the financial interests of the litigation funders and the proposed resolution does not reflect the nature or scale of the underlying issue.' The litigation funders, LPF Group, will take a cut of between 13% and 25% of the settlement. Peters says litigation funders stand to make 'windfall gains' On Wednesday the Herald reported that New Zealand First deputy leader Shane Jones expressed concern over the retrospective element of the proposed law change, saying his party would take advice before deciding whether to support the bill being passed into law in its current state. However on Thursday, the party's leader Winston Peters defended Commerce and Consumer Minister Scott Simpson during question time in Parliament, saying the 2015 legislation was 'badly drafted' and litigation funders stood to make 'windfall gains' if the law wasn't changed. Act leader David Seymour told the Herald his party supported the bill because it is a part of the Coalition Government. However, he had written to Simpson asking how to respond to constituents concerned about the bill applying to the past. 'Who knows, maybe Scott will change his mind in response to this,' Seymour said. Labour MP Arena Williams took aim at Simpson during question time on Thursday for getting a key detail of the proposed law change wrong during an interview on Newstalk ZB, and incorrectly saying the Government hadn't been lobbied by the banks on the matter. She echoed an allegation made by the litigation funders that Simpson wasn't across the detail when he took the proposed law change to Cabinet, as he had only just been appointed Commerce and Consumer Affairs Minister following Andrew Bayly's resignation. ASB and ANZ CEOs to be questioned by politicians Coming back to ASB, it questioned the math behind the proposed settlement, saying it provided 'no certainty to ASB or other banks which may become subject to similar class actions, or to the sector as a whole'. The customers' lawyers said $600m was equivalent to 3.5% of ANZ's profits between 2016 and 2019, and 5% of ASB's profits over this time. They proposed the banks pay the lesser of $600m and 68% of the borrowing costs customers paid through the duration of the banks' breaches. Under the existing law, the banks could be required to reimburse customers 100% of the borrowing costs they paid for the duration of the breaches. If the law is changed, judges will be empowered to use their discretion to issue fair penalties. The starting point won't be the reimbursement of all borrowing costs. Parliament's finance and expenditure committee is considering written and oral submissions from the public on the proposed law change. ANZ's chief executive and general counsel, and ASB's chief executive and board chair are among those who will present to the committee on Monday. The committee will also hear from various consumer groups and legal experts, among others. Jenée Tibshraeny is the Herald's Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
RNZ News
19 hours ago
- RNZ News
ASB rejects offer to settle class action lawsuit for more than $300m
ASB and ANZ have both rejected an offer to settle a class action lawsuit for more than $300 million. Photo: ASB bank has rejected an offer to settle a class action law suit for historic breaches of credit disclosure laws . The offer on behalf of more than 150,000 customers of the ASB and ANZ was to settle for just over $300 million. ASB has joined ANZ in rejecting the offer as a move to influence MPs considering changes to the credit laws to close historic loopholes and bad drafting. ASB said it did not understand how the offer had been calculated, and that it would not put an end to legal action. The consumers' group said the proposed credit law changes might undermine their claim, while the industry said the loopholes posed a multi-billion dollar risk for the financial system. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
19 hours ago
- RNZ News
Is an inheritance relationship property
RNZ money correspondent Susan Edmunds. Photo: RNZ Send your questions to I'm about to receive an inheritance from a family member. I'm wondering, will this become relationship property? My partner and I have been living together for three years, and I'm wondering whether he'll be entitled to half. I spoke to Mark Henaghan, a law professor at the University of Auckland about this. He says no, it won't automatically become relationship property, but there's a pretty big caveat to know about - if it gets intermingled with anything that is relationship property, it will. That means, if you take your inheritance and use it to pay off the mortgage on the home you both live in - if you have one - it becomes relationship property. If you want to keep it separate, you need to hold it in a separate account and use it for separate purposes. Henaghan said, if you used it for something separate, but then your partner helped increase its value, they might then be entitled to a share of that increase. Generally, relationship property is assets you've gained during the relationship, such as the family home and contents, even if one of you brought it into the relationship, your earnings through the period, your investments and non-personal debts. Separate property refers to things like inheritances and gifts, heirlooms, taonga, property under a trust and property, apart from the family home, that was acquired before your relationship began. If you have questions or think you might need a contracting-out agreement, which can be used to keep property separate, a lawyer will be able to help. Is it better to get health insurance now or put the same amount of money aside each month into a manage fund to pay for your health needs as you age? I asked my 78-year-old aunt, who has lots of health conditions and is now paying $10,000 a year for insurance, and she wishes she did the managed-fund thing. Health insurance seems to turn you down so easily and they won't touch you, if there's ACC involvement - the dilemma my mum is facing now with trying to get knee surgery. At least a managed fund would give you freedom, but I guess it depends on your appetite for risk in the short term. This is a really interesting question. I looked at the cost of health insurance this week and you're right, it gets dramatically more expensive as you get older and more likely to need it! I can see why the managed-fund idea appeals, but I think there are a couple of problems with it too. You'd need to have a good idea of how much you want to have saved, which is probably quite hard to predict, particularly because the cost of treatments can change a lot, as technology improves and Government funding changes, among other things. As you say, there is a risk that you'd need treatment before you'd built up enough money to pay for it. It would also take a fair amount of discipline to stick to that as a separate savings and investment goal, especially when you're young and have competing financial needs. Then, when you're older, it would require discipline again to keep the money aside for potential future health needs, when you might have other things you want to fund. I asked Genesis Advice financial adviser Edward Glennie what he thought. He said health insurance made more sense. "The problem is people might think they are putting money aside for their health needs, but the line can easily be blurred with somebody's income needs in retirement," he said. "Then, when they need to access the managed funds/investment to pay for an operation or medical treatment, the money might not be there. "A better solution is to keep health insurance in place and just increase the annual excess. You could, say, make it $5000 and then perhaps put savings aside to cover the excess, when or if they need it. "Having a managed fund is not really freedom, because unless you are extremely disciplined, the money might be used for something else. "The only time I've seen someone do it was when they were extremely wealthy, when they have the money already to pay for any surgery. They can afford to self-insure for their medical needs. "Building up a meaningful capital base via managed funds for someone like your aunt, aged 78, would take too long and potentially leave her open to too much risk in order to generate the returns needed to pay for expensive surgery." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
