Co-op pays back $7.3m
The Co-operative Bank has admitted breaching the Credit Contracts and Consumer Finance Act (CCCFA) and has paid 48,249 customers an overall total of $7.225 million for charging higher fees than it should have done.
The bank has now entered into a settlement agreement with the Commerce Commission and the regulator’s claims will go to the high court, which will decide on the pecuniary penalty.
Sarah Bartlett, the commission’s director of credit, says the case follows an investigation into the company charging of unreasonable fees under the CCCFA.
“Unreasonable fees don’t just erode trust in the banking sector, they have a direct and tangible impact on consumers’ wallets, often hitting those least able to absorb unexpected costs,” she adds.
The bank had 12 unreasonable charges across its products involving home, personal and vehicle loans. These including home-loan establishment and overdraft facility charges with most imposed between June 6, 2015, and November 30, 2021.
“The bank’s conduct fell short of what we would expect from a responsible lender,” says Bartlett. “It failed to undertake regular fee reviews, and invest in adequate systems, processes and controls to ensure it complied with the law.
“Holding banks accountable is an important part of the commission’s work to ensure compliance with consumer credit laws, and to ensure people are able to borrow money safely and fairly. It’s always our priority to deliver real outcomes for people.”
Mark Wilkshire, chief executive officer of the Co-operative Bank, says: “We take our responsibilities to customers seriously and regret some historical practices did not meet the standards required. We identified the issue, self-reported it, and have worked hard to put things right for affected customers present and past. We’re committed to doing better.
“We are now in the final stages of remediating all impacted customers affected by the historical issues. The bank has co-operated with the Commerce Commission’s investigation. Having admitted the breaches, the matter will now progress to a hearing at which the court will determine the penalty.
“The commission and bank are aligned on a recommended penalty amount. The Co-operative Bank has previously provided for potential penalties, so it’s not expected to have an impact on the bank’s results for the financial year to March 31, 2026.”
The regulator opened an investigation into the bank after it first alerted it to the concerns it had about fee amounts it had charged. The commission then obtained more information.
The list of relevant fees considered to be “unreasonable” included establishment, restructure and variation fees for home loans, and charges for revolving credit facilities, early repayment – also referred as the early full and part repayment fees – security discharge fees (also known as full or partial mortgage discharge fees), and mortgage discharge fees.
Others were fees for rates demands, personal and vehicle loan establishment, overdraft facilities and cash advances, also known as the bank’s fair rate credit card cash advance fee.
