ASB will repay customers nearly $9 million following a Commerce Commission warning over borrowers being overcharged.
The consumer watchdog warned the bank that it is likely to have breached its obligations by failing to act with the care, diligence and skill of a responsible lender.
The Commerce Commission also said the bank was likely to have made false or misleading representations of its right to charge the incorrect early repayment adjustment (ERA) fees.
Following the Commerce Commission warning, the bank agreed to repay $8.9m to borrowers who were overcharged.
ASB has also provided the Commerce Commission with a plan explaining how it will locate affected customers to make the refunds.
Affected customers will be paid the difference between the amount that they should have been charged and the amount that ASB actually charged them, together with interest.
ASB began repaying customers in July 2020 and has already repaid a significant proportion of the $8.9m to affected borrowers.
ASB identified the issues and reported them to the commission.
The calculation errors affect more than 48,000 early readjustment fees for borrowers who terminated their fixed-rate term loans between April 2005 and December 2016.
“Lenders must implement robust systems and processes to help them to comply with their legal obligations. Those processes should include adequate checks to identify and rectify failures quickly if they arise,” said Commerce Commission chair Anna Rawlings.
“ASB identified these matters itself and reported them to the commission. It developed a plan for compensating borrowers and it has begun making refund payments to affected customers. It has waived any claim in relation to undercharged ERA fees. ASB has also made process changes to ensure the problem does not reoccur.”
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