Latest news with #CreditContractsandConsumerFinanceAct

RNZ News
7 hours ago
- Business
- RNZ News
What you need to know about a 150,000-customer banking class action
Photo: ASB and ANZ have rejected an offer to settle a class action suit against them, for about $300 million. Instead, the legal drama continues - and now the country's lawmakers are involved, too. So what is the class action suit actually about, and what's happening now? The class action is for breaches of the Credit Contracts and Consumer Finance Act (CCCFA). Between 2015 and 2019, the law said that a lender that was in breach of its disclosure requirements had to repay borrowers all the interest and fees they were charged during the time when they were not compliant with the rules. The class action claims that between 30 May, 2015 and 28 May, 2016, a coding error in one of ANZ's systems failed to take into account interest that had been accrued and not yet charged. As a result, loan variation letters contained incorrect information. ANZ said it meant customers were undercharged. The class action also claims that between 6 June, 2015 and 18 June, 2019, ASB did not ensure customers received variation disclosure when they requested changes to repayment amounts, dates or frequency, over the phone or in branch. They also say ASB did not provide customers with compliant variation disclosure when requesting other kinds of changes. It has been estimated that, if banks were to lose in court, more than 150,000 customers could be reimbursed a combined total of hundreds of millions of dollars. Customers have been added to the class action on an "opt out basis". All ASB and ANZ customers the court determines to be affected will be represented unless they choose not to be. The action has been in progress for about four years and University of Auckland senior law lecturer Nikki Chamberlain said it was the biggest consumer class action she was aware of in New Zealand history. The banks have already compensated affected customers after reporting the breaches to the Commerce Commission. ANZ first paid customers about $6 million. The Commerce Commission investigated and the bank admitted a breach of its responsible lending obligations and agreed to pay customers another $29.4m. ASB agreed to pay just over $8m. The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill, which is before select committee, includes a retrospective fix that would mean instead of a blanket penalty applying for disclosure breaches between 2015 and 2019, a court would be allowed to decide what compensation was "just and equitable". In 2019, the law was amended to apply to breaches from that point, but this change would apply to breaches before that time, too, if they had not been dealt with by a court already. "Changing the law creates a dangerous precedent for everyone and exposes the plaintiffs to more cost and delay, as well as introducing uncertainty to their established claim," said Scott Russell, the lawyer leading the banking class action. Chamberlain said many consumer protection laws were punitive rather than compensatory. "The reason we have punitive remedial provisions in these consumer-based legislations is to incentivise big players like the banks to invest in their compliance systems. Otherwise what would be the motivation for the bank to invest in their systems? Their money is better spent in growing their lending portfolio… so there's this idea that we want to incentivise banks to self-regulate to some extent. "We want them to be having good practises and disclosing what they need to be disclosing in their lending documents to customers and we need to have punishment that's severe enough they take notice." She said the change could make it uneconomical to pursue the case, and could put litigation funders off from taking action in future in other scenarios. "If you change the remedial provision retrospectively, you are going to increase the cost of evidence that is required and the legal fees required because you're going to have to go through every single breach for every single customer, and go through the factors and that's going to blow the cost out which might make the litigation uneconomical and unviable. "Litigation funders have been funding it. Litigation funders are a good thing. Yes, they do take a percentage on a no win, no fee basis. But what litigation funders do with class actions is they make claims which would ordinarily be uneconomic to pursue economically viable." She said the defendants could use the fact there was a power disparity between them and plaintiffs to their advantage, but litigation funders helped to offset that. "One of my bigger concerns is about the rule of law, retrospective legislation in general is something that is not well looked upon. "In fact, it should not be enacted unless there are extraordinary circumstances. Why is that? Because we need certainty in the law. If people can't rely on the rights and remedies provided by the law at the time of breach, then there's uncertainty in the law and it will absolutely impinge on the integrity of the legal system. And eventually, democracy itself, because it goes to us being able to rely on what our rights are… why would a funder enter the market if there's a concern that big powerful organisations who are defendants in active litigation can lobby the government and they just change the law midway through the proceeding, in their favour?" It would be possible to put a long stop limitation provision in the law to prohibit any future litigation under the old rules, she said, if the concern was about the future liability of other lenders. But Roger Beaumont, chief executive of the New Zealand Banking Association, said the change was needed. "Between 2015 and 2019 any lender who even made a small mistake in the information provided to borrowers, like getting their phone number wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan. "Modelling from the Reserve Bank shows a potential risk to the financial system of $12.9 billion. The Reserve Bank considered more extreme variations that 'were much more severe' but didn't publish them as they were too 'speculative'. A financial system risk much worse than $13 billion should be concerning to everyone." He said the change would also benefit smaller lenders who could not absorb the cost of legal action. Banking expert Claire Matthews, from Massey University, said if the claim were successful, there was a risk that litigation funders might see it as a way to make money. "They could be exploring other opportunities to see if there is something else that somebody had done." She said the law as it stood "significantly advantaged customers" and "almost encourages them to find a mistake. If you can find that somebody's made a mistake, and let's face it, people do make mistakes from time to time, you could have a very small mistake which is what was the case here and suddenly you don't have to pay any interest for the whole time of the loan? That to me just seems a bit unusual". The Commerce Commission had the ability to apply punitive damages if it had considered it appropriate, she said. Retrospective legislation was not uncommon. "It's kind of two different arguments. Maybe it's bad, but it's happened often enough that suggests that in certain circumstances, it's not unreasonable to do in this case." Claimants in the class action last week offered to settle for more than $300 million. But both banks rejected it. The offer included a cap on liability that was the lesser of either 68 percent of what customers paid in borrowing costs during the breach period, or a small percentage of bank profits. For ANZ the percentage was 3.5 percent of profits from FY16 through FY19. While ASB's offer was 5 percent of profits during the same period. ANZ described the offer as a stunt. Matthews said if the law change went ahead it would have a big impact on the case. "I'm not sure that it would completely kill the case but it would have a substantial impact. I think there would be potential for the case to still progress but the associated penalties and the impact of a decision in favour of the applicants would have less benefits for them and therefore the litigation funders might decide it was no longer worth their while to purse it because the costs would be too great."

RNZ News
7 hours ago
- Business
- RNZ News
Yhat you need to know about a 150,000-customer banking class action
Photo: ASB and ANZ have rejected an offer to settle a class action suit against them, for about $300 million. Instead, the legal drama continues - and now the country's lawmakers are involved, too. So what is the class action suit actually about, and what's happening now? The class action is for breaches of the Credit Contracts and Consumer Finance Act (CCCFA). Between 2015 and 2019, the law said that a lender that was in breach of its disclosure requirements had to repay borrowers all the interest and fees they were charged during the time when they were not compliant with the rules. The class action claims that between 30 May, 2015 and 28 May, 2016, a coding error in one of ANZ's systems failed to take into account interest that had been accrued and not yet charged. As a result, loan variation letters contained incorrect information. ANZ said it meant customers were undercharged. The class action also claims that between 6 June, 2015 and 18 June, 2019, ASB did not ensure customers received variation disclosure when they requested changes to repayment amounts, dates or frequency, over the phone or in branch. They also say ASB did not provide customers with compliant variation disclosure when requesting other kinds of changes. It has been estimated that, if banks were to lose in court, more than 150,000 customers could be reimbursed a combined total of hundreds of millions of dollars. Customers have been added to the class action on an "opt out basis". All ASB and ANZ customers the court determines to be affected will be represented unless they choose not to be. The action has been in progress for about four years and University of Auckland senior law lecturer Nikki Chamberlain said it was the biggest consumer class action she was aware of in New Zealand history. The banks have already compensated affected customers after reporting the breaches to the Commerce Commission. ANZ first paid customers about $6 million. The Commerce Commission investigated and the bank admitted a breach of its responsible lending obligations and agreed to pay customers another $29.4m. ASB agreed to pay just over $8m. The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill, which is before select committee, includes a retrospective fix that would mean instead of a blanket penalty applying for disclosure breaches between 2015 and 2019, a court would be allowed to decide what compensation was "just and equitable". In 2019, the law was amended to apply to breaches from that point, but this change would apply to breaches before that time, too, if they had not been dealt with by a court already. "Changing the law creates a dangerous precedent for everyone and exposes the plaintiffs to more cost and delay, as well as introducing uncertainty to their established claim," said Scott Russell, the lawyer leading the banking class action. Chamberlain said many consumer protection laws were punitive rather than compensatory. "The reason we have punitive remedial provisions in these consumer-based legislations is to incentivise big players like the banks to invest in their compliance systems. Otherwise what would be the motivation for the bank to invest in their systems? Their money is better spent in growing their lending portfolio… so there's this idea that we want to incentivise banks to self-regulate to some extent. "We want them to be having good practises and disclosing what they need to be disclosing in their lending documents to customers and we need to have punishment that's severe enough they take notice." She said the change could make it uneconomical to pursue the case, and could put litigation funders off from taking action in future in other scenarios. "If you change the remedial provision retrospectively, you are going to increase the cost of evidence that is required and the legal fees required because you're going to have to go through every single breach for every single customer, and go through the factors and that's going to blow the cost out which might make the litigation uneconomical and unviable. "Litigation funders have been funding it. Litigation funders are a good thing. Yes, they do take a percentage on a no win, no fee basis. But what litigation funders do with class actions is they make claims which would ordinarily be uneconomic to pursue economically viable." She said the defendants could use the fact there was a power disparity between them and plaintiffs to their advantage, but litigation funders helped to offset that. "One of my bigger concerns is about the rule of law, retrospective legislation in general is something that is not well looked upon. "In fact, it should not be enacted unless there are extraordinary circumstances. Why is that? Because we need certainty in the law. If people can't rely on the rights and remedies provided by the law at the time of breach, then there's uncertainty in the law and it will absolutely impinge on the integrity of the legal system. And eventually, democracy itself, because it goes to us being able to rely on what our rights are… why would a funder enter the market if there's a concern that big powerful organisations who are defendants in active litigation can lobby the government and they just change the law midway through the proceeding, in their favour?" It would be possible to put a long stop limitation provision in the law to prohibit any future litigation under the old rules, she said, if the concern was about the future liability of other lenders. But Roger Beaumont, chief executive of the New Zealand Banking Association, said the change was needed. "Between 2015 and 2019 any lender who even made a small mistake in the information provided to borrowers, like getting their phone number wrong, could be subject to a draconian provision in the law that, on one interpretation, would make them repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan. "Modelling from the Reserve Bank shows a potential risk to the financial system of $12.9 billion. The Reserve Bank considered more extreme variations that 'were much more severe' but didn't publish them as they were too 'speculative'. A financial system risk much worse than $13 billion should be concerning to everyone." He said the change would also benefit smaller lenders who could not absorb the cost of legal action. Banking expert Claire Matthews, from Massey University, said if the claim were successful, there was a risk that litigation funders might see it as a way to make money. "They could be exploring other opportunities to see if there is something else that somebody had done." She said the law as it stood "significantly advantaged customers" and "almost encourages them to find a mistake. If you can find that somebody's made a mistake, and let's face it, people do make mistakes from time to time, you could have a very small mistake which is what was the case here and suddenly you don't have to pay any interest for the whole time of the loan? That to me just seems a bit unusual". The Commerce Commission had the ability to apply punitive damages if it had considered it appropriate, she said. Retrospective legislation was not uncommon. "It's kind of two different arguments. Maybe it's bad, but it's happened often enough that suggests that in certain circumstances, it's not unreasonable to do in this case." Claimants in the class action last week offered to settle for more than $300 million. But both banks rejected it. The offer included a cap on liability that was the lesser of either 68 percent of what customers paid in borrowing costs during the breach period, or a small percentage of bank profits. For ANZ the percentage was 3.5 percent of profits from FY16 through FY19. While ASB's offer was 5 percent of profits during the same period. ANZ described the offer as a stunt. Matthews said if the law change went ahead it would have a big impact on the case. "I'm not sure that it would completely kill the case but it would have a substantial impact. I think there would be potential for the case to still progress but the associated penalties and the impact of a decision in favour of the applicants would have less benefits for them and therefore the litigation funders might decide it was no longer worth their while to purse it because the costs would be too great."


Scoop
12-06-2025
- Business
- Scoop
ComCom Prosecutes Unregistered Lender Who Targeted Vulnerable Consumers
Press Release – Commerce Commission The Commission has prioritised enforcement action against lenders who have not met their obligations under the CCCFA. The Commission is particularly focussed on lenders who provide credit to vulnerable consumers in New Zealand. The Commerce Commission has filed criminal charges in the Auckland District Court against an unregistered and uncertified lender, Ilaisaane Malupo, trading as Nane Easy Loan Finance Services NZ (Nane Loans). The Commission alleges Ms Malupo provided personal loans illegally to members of the Tongan community in South Auckland from March 2024. Associate Commissioner Joseph Liava'a says when lenders are identified operating outside of the law, the Commission will act swiftly to shutdown these operations to ensure that consumers are protected when borrowing money or buying goods on credit. Under the Financial Service Providers (Registration and Dispute Resolution) Act and the Credit Contracts and Consumer Finance Act (CCCFA), all lenders must be registered and certified in order to provide consumer credit. 'Often these kinds of lenders are a last resort for people who are struggling to borrow from reputable lenders. Many people who borrowed from Ms Malupo were already under financial pressure and on low incomes, so irresponsible lending could have had a big impact on borrowers and their families,' Mr Liava'a says. 'Some of the borrowers indicated they needed to borrow money to buy food or pay off other loans,' Mr Liava'a says. Alongside the lack of certification, the Commission alleges Ms Malupo's terms included high interest rates of up to 15 per cent charged on a weekly basis, which would double if borrowers failed to repay the loans within 28 days; and late payment fees of up to $10 per day. 'In order to keep up with payments some borrowers resorted to selling their sentimental possessions or missing rent payments,' Mr Liava'a says. Ms Malupo operated her business on social media and in some cases threatened that borrowers who failed to repay their debt would be 'named and shamed' on Facebook or other Tongan media sites until repayment was made. 'Public shaming is never ok and could put borrowers in a vulnerable position to avoid being called out for their friends and family to see,' Mr Liava'a says. The Commission has prioritised enforcement action against lenders who have not met their obligations under the CCCFA. The Commission is particularly focussed on lenders who provide credit to vulnerable consumers in New Zealand. Background The Commission launched an investigation into Ilaisaane Malupo after receiving enquiries, including from a financial mentor about Ms Malupo's lending practices which were causing harm to borrowers. Whilst the Commission is continuing its investigation into further breaches of the CCCFA which are likely to have occurred, the Commission's immediate priority was to stop Ms Malupo from entering new loans or enforcing any existing loans. Ms Malupo has been charged (4 June 2025) with: Criminal charges under section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for providing a financial service without being registered, the penalty of which is 12 months' imprisonment or a fine not exceeding $100,000; and Criminal charges under section 103(2) of the Commerce Act 1986 for attempting to deceive or knowingly mislead the Commission on any matter before it, the penalty of which is a fine not exceeding $100,000. All lenders must be certified under Part 5A of the Credit Contracts and Consumer Finance Act 2003 by the Commerce Commission. To gain certification, lenders must satisfy the Commission that those operating the business are financially sound, honest, reputable, reliable and competent to do the job.


Scoop
12-06-2025
- Business
- Scoop
ComCom Prosecutes Unregistered Lender Who Targeted Vulnerable Consumers
Press Release – Commerce Commission The Commission has prioritised enforcement action against lenders who have not met their obligations under the CCCFA. The Commission is particularly focussed on lenders who provide credit to vulnerable consumers in New Zealand. The Commerce Commission has filed criminal charges in the Auckland District Court against an unregistered and uncertified lender, Ilaisaane Malupo, trading as Nane Easy Loan Finance Services NZ (Nane Loans). The Commission alleges Ms Malupo provided personal loans illegally to members of the Tongan community in South Auckland from March 2024. Associate Commissioner Joseph Liava'a says when lenders are identified operating outside of the law, the Commission will act swiftly to shutdown these operations to ensure that consumers are protected when borrowing money or buying goods on credit. Under the Financial Service Providers (Registration and Dispute Resolution) Act and the Credit Contracts and Consumer Finance Act (CCCFA), all lenders must be registered and certified in order to provide consumer credit. 'Often these kinds of lenders are a last resort for people who are struggling to borrow from reputable lenders. Many people who borrowed from Ms Malupo were already under financial pressure and on low incomes, so irresponsible lending could have had a big impact on borrowers and their families,' Mr Liava'a says. 'Some of the borrowers indicated they needed to borrow money to buy food or pay off other loans,' Mr Liava'a says. Alongside the lack of certification, the Commission alleges Ms Malupo's terms included high interest rates of up to 15 per cent charged on a weekly basis, which would double if borrowers failed to repay the loans within 28 days; and late payment fees of up to $10 per day. 'In order to keep up with payments some borrowers resorted to selling their sentimental possessions or missing rent payments,' Mr Liava'a says. Ms Malupo operated her business on social media and in some cases threatened that borrowers who failed to repay their debt would be 'named and shamed' on Facebook or other Tongan media sites until repayment was made. 'Public shaming is never ok and could put borrowers in a vulnerable position to avoid being called out for their friends and family to see,' Mr Liava'a says. The Commission has prioritised enforcement action against lenders who have not met their obligations under the CCCFA. The Commission is particularly focussed on lenders who provide credit to vulnerable consumers in New Zealand. Background The Commission launched an investigation into Ilaisaane Malupo after receiving enquiries, including from a financial mentor about Ms Malupo's lending practices which were causing harm to borrowers. Whilst the Commission is continuing its investigation into further breaches of the CCCFA which are likely to have occurred, the Commission's immediate priority was to stop Ms Malupo from entering new loans or enforcing any existing loans. Ms Malupo has been charged (4 June 2025) with: Criminal charges under section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for providing a financial service without being registered, the penalty of which is 12 months' imprisonment or a fine not exceeding $100,000; and Criminal charges under section 103(2) of the Commerce Act 1986 for attempting to deceive or knowingly mislead the Commission on any matter before it, the penalty of which is a fine not exceeding $100,000. All lenders must be certified under Part 5A of the Credit Contracts and Consumer Finance Act 2003 by the Commerce Commission. To gain certification, lenders must satisfy the Commission that those operating the business are financially sound, honest, reputable, reliable and competent to do the job.


Scoop
12-06-2025
- Business
- Scoop
ComCom Prosecutes Unregistered Lender Who Targeted Vulnerable Consumers
The Commerce Commission has filed criminal charges in the Auckland District Court against an unregistered and uncertified lender, Ilaisaane Malupo, trading as Nane Easy Loan Finance Services NZ (Nane Loans). The Commission alleges Ms Malupo provided personal loans illegally to members of the Tongan community in South Auckland from March 2024. Associate Commissioner Joseph Liava'a says when lenders are identified operating outside of the law, the Commission will act swiftly to shutdown these operations to ensure that consumers are protected when borrowing money or buying goods on credit. Under the Financial Service Providers (Registration and Dispute Resolution) Act and the Credit Contracts and Consumer Finance Act (CCCFA), all lenders must be registered and certified in order to provide consumer credit. 'Often these kinds of lenders are a last resort for people who are struggling to borrow from reputable lenders. Many people who borrowed from Ms Malupo were already under financial pressure and on low incomes, so irresponsible lending could have had a big impact on borrowers and their families,' Mr Liava'a says. 'Some of the borrowers indicated they needed to borrow money to buy food or pay off other loans,' Mr Liava'a says. Alongside the lack of certification, the Commission alleges Ms Malupo's terms included high interest rates of up to 15 per cent charged on a weekly basis, which would double if borrowers failed to repay the loans within 28 days; and late payment fees of up to $10 per day. 'In order to keep up with payments some borrowers resorted to selling their sentimental possessions or missing rent payments,' Mr Liava'a says. Ms Malupo operated her business on social media and in some cases threatened that borrowers who failed to repay their debt would be 'named and shamed' on Facebook or other Tongan media sites until repayment was made. 'Public shaming is never ok and could put borrowers in a vulnerable position to avoid being called out for their friends and family to see,' Mr Liava'a says. The Commission has prioritised enforcement action against lenders who have not met their obligations under the CCCFA. The Commission is particularly focussed on lenders who provide credit to vulnerable consumers in New Zealand. Background The Commission launched an investigation into Ilaisaane Malupo after receiving enquiries, including from a financial mentor about Ms Malupo's lending practices which were causing harm to borrowers. Whilst the Commission is continuing its investigation into further breaches of the CCCFA which are likely to have occurred, the Commission's immediate priority was to stop Ms Malupo from entering new loans or enforcing any existing loans. Ms Malupo has been charged (4 June 2025) with: Criminal charges under section 11 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for providing a financial service without being registered, the penalty of which is 12 months' imprisonment or a fine not exceeding $100,000; and Criminal charges under section 103(2) of the Commerce Act 1986 for attempting to deceive or knowingly mislead the Commission on any matter before it, the penalty of which is a fine not exceeding $100,000. All lenders must be certified under Part 5A of the Credit Contracts and Consumer Finance Act 2003 by the Commerce Commission. To gain certification, lenders must satisfy the Commission that those operating the business are financially sound, honest, reputable, reliable and competent to do the job. An up-to-date database of certified lenders can be found here: The Commission has released a 'quick guide to borrowing money' to assist borrowers on what to expect from a lender here: