Bank fined $2.5m for fees

The high court has imposed a $2.482 million penalty on the Co-operative Bank for breaching the Credit Contracts and Consumer Finance Act (CCCFA).

The judgement comes after the Commerce Commission and bank entered into a settlement agreement last year and it admitted to breaking the law.

Sarah Bartlett, the regulator’s director of credit, says the lender has remediated 48,249 customers with around $7.225m for charging the fees. The bank accepted the overcharging occurred after a series of compliance and process failures.

In her judgement, Justice Victoria Heine noted the circumstances behind the breaches varied from fee to fee. However, they “suggest there was a fundamental failure within the Co-operative at the time to appreciate what was needed to comply with the fees provisions”.

Bartlett says it is crucial banks have robust compliance practices, and adequate processes and controls, in place to ensure they catch these sorts of issues.

“Investing in compliance and rigorously auditing processes and controls is a crucial step towards avoiding an investigation, court action and a hefty penalty,” she adds.

The Co-operative Bank charged 12 unreasonable fees across its lending products involving home and personal loans – including vehicle establishment and overdraft facility fees – with most being charged between June 6, 2015, and November 30, 2021.

Justice Heine said the penalty “is not an amount that would be seen as merely the costs of doing business”. She added: “I’m satisfied the penalty proposed is sufficient to contribute to deterring others from running the risk of non-compliance.” A copy of the judgement is available on the commission’s case register.