Banks cop it from regulator
The Commerce Commission has secured three final settlement agreements before passing on the responsibility for a piece of legislation to the Financial Markets Authority (FMA).
The deals were reached with the ASB, TSB and Nelson Building Society, which all admitted to breaching the responsible lending requirements set out in the Credit Contracts and Consumer Finance Act (CCCFA).
The companies failed to have adequate systems and processes in place to ensure they complied with their obligations. Impacted borrowers will be proactively remediated by the lenders if they haven’t already been.
“The CCCFA has been a significant function at the commission for the past 20 years and these settlements book-end a successful portfolio of enforcement,” says
Anne Callinan, pictured above, the regulator’s deputy chair.
“We’ve taken action across the spectrum of lenders under the CCCFA, big and small. The constant throughout has been a focus on protecting consumers.
“Through this work, we’ve gained insights into the hardship some households face, which has helped us understand the impact of our work and make considered choices in what we do.
“Although the CCCFA role has moved to the FMA, we will continue to put consumers at the heart of our work as we address complex, economy-wide competition challenges.
“We’ve worked closely with the FMA to ensure the transfer of the CCCFA is smooth for borrowers and lenders, and that this important work can continue seamlessly.
“The final settlements we have secured mark the closing of a significant chapter, in which over 20 years the commission took more than 60 cases to court, won penalties and reparations of over $100 million in total and oversaw remediation of close to $90m back to consumers.”
The official date of transfer was July 1 and it creates a single conduct regulator for the financial markets. The commission reminds lenders and borrowers to now refer CCCFA matters to the FMA.
Settlement of cases
As part of the settlements, all three lenders have agreed to the commission seeking declarations in relation to breaches of section 9c(1) and pecuniary penalties under section 107a of the CCCFA.
ASB self-reported and has admitted breaches of lender responsibility principles, in relation to failing to conduct affordability and suitability assessments when establishing or varying overdrafts.
It also failed to have sufficient systems or processes in place for ensuring the required disclosure was provided for overdrafts, and did not detect and reimburse customer overpayments.
The TSB self-reported and admitted to breaches of the lender responsibility principles, in relation to:
• Failing to have sufficient and robust processes and controls in place to ensure compliance with those principles.
• Failing to have suitable governance arrangements in place to ensure its overdraft products were consistently assessed for compliance.
• Some breaches resulted in borrowers being overcharged. Others meant borrowers were not sent all the information the TSB should have provided.
Nelson Building Society also self-reported and admitted to breaching the lender responsibility principles in relation to interest overcharges and failing to conduct proper affordability assessments for 37 migrant workers.
It failed to have adequate systems, processes and controls to provide continuing disclosure, and the required information and documents to borrowers and guarantors when loans were changed. It also admitted to breaching section 18 of the CCCFA.
