Photo: RNZ / Cole Eastham-Farrelly
TSB Bank has been hit with a near $2.5 million penalty for overcharging customers.
The High Court imposed the penalty after the Commerce Commission took legal action for historic breaches of the Credit Contracts and Consumer Finance Act.
The New Plymouth-based bank reported itself for overcharging customers about $3.6m more than allowed through unreasonable credit and default fees between 2015 and 2021.
“TSB’s breaches were serious given the large number of customers affected, the level of harm from overpaid fees, and the extensive duration of the breaches,” Commerce Commission deputy chair Anne Callinan said.
She said lenders covered by the Act were not allowed to charge fees more than the cost of the transaction.
The judge described the long term overcharging as being of “high gravity”.
TSB said system failures had resulted in the overcharging, and it had repaid about $6m to 48,000 affected borrowers.
Callinan said lenders needed to be checking fees regularly and could not set fees and then forget them.
“The rules around credit and default fees are well established and we expect lenders like TSB to have proper processes in place to make sure they’re following their obligations.”