ASB Settles Banking Class Action Claim For $135.6m – Case Against ANZ Continues

The ASB plaintiffs in the Banking Class Action have reached a $135.6m settlement with ASB to resolve the ASB class members’ claims relating to alleged breaches by ASB of its disclosure obligations under the Credit Contracts and Consumer Finance Act (CCCFA).

The case against ANZ continues.

Scott Russell, the lawyer representing the ASB plaintiffs, said the settlement was reached without ASB admitting liability and is subject to court approval. The settlement would conclude over four years of court action against ASB.

“This is a positive outcome for affected ASB customers. After four years of litigation, settlement provides certainty, avoiding what would otherwise be a very long and expensive fight through the courts. It importantly also removes the risk around the Government’s proposed retrospective law change in the CCCFA Amendment Bill,” said Russell.

Russell confirmed that the case against ANZ, which also alleges disclosure breaches, will continue and ANZ is defending the claim.

“ANZ customers also deserve a positive outcome. In March 2020, ANZ admitted to the Commerce Commission that between May 2015 and May 2016 it sent Loan Variation Letters to certain customers that contained incorrect information with respect to their loan. We say that this was a breach of ANZ’s disclosure obligations and serious.

“We remain fully committed to ensuring the rights of ANZ customers are upheld and ANZ repays the borrowing costs we say it was not allowed to charge or retain during the years it was allegedly non-compliant.”

Russell said that if the ASB settlement is approved, it will leave ANZ as the only known lender facing active litigation to benefit from the Government's proposed retrospective change to the CCCFA.

“ANZ would be the sole known beneficiary of any retrospective law change. It is unclear why the Government would intervene to protect one large Australian-owned bank.

“There was never any credible rationale for changing the law in the middle of an active court case. As acknowledged by Treasury, the Banking Class Action never did and still does not pose a threat to the financial system or the funds available for lending. Changing the law now would not be in the public interest and would set a dangerous precedent – protecting a single, large Australian-owned bank.”

He added that the case against ANZ reinforces the consumer protection role of the CCCFA and encourages compliance more generally: “We consider that the provisions relied on by the plaintiffs are not just about returning borrowing costs to customers. They also play an important role in deterring future breaches and ensuring banks and other creditors are motivated to invest in proper systems to protect their customers.”

The ASB plaintiffs will seek directions from the Court on the process for communicating with potential class members about the settlement. At this stage ASB customers don’t need to do anything and will receive further information in due course.

Notes

• The Banking Class Action was filed in 2021 on behalf of a significant number of New Zealand ANZ and ASB customers.
• The case against ASB alleges failures to provide compliant written disclosure of loan variations to a significant number of customers.
• Between 30 May 2015 and 28 May 2016, due to a coding error in a loan calculator, ANZ provided some customers who made changes to their loans with letters intended to provide variation disclosure that contained inaccurate information. In its agreement with the Commerce Commission, ANZ admitted that incorrect information was provided to more than 100,000 customers. These letters featured one or more of the following errors: the total amount payable under the loan the total amounts of interest payable, the amount of the regular payments, the total number of payments to be made, and the date of the final payment under their loans.
• In July, ANZ declined an open settlement offer from the Banking Class Action of approximately $300m which would have resolved the claims earlier.
• The Government has justified the retrospective clause in the CCCFA Amendment Bill by citing “systemic risk” and the need for fairness.
  • The Reserve Bank’s modelling was used to claim potential liabilities of up to $12.9b, but this figure was based on extreme, speculative scenarios. More realistic estimates were far lower.
  • If the settlement is approved, the Banking Class action will continue only against ANZ, and only on behalf of approximately 17,000 customers.
  • No cases are before the courts against small or regional lenders - the only litigation affected is the Banking Class Action against two of the most profitable Australian-owned banks.
  • Retrospective lawmaking in the middle of an active court case is highly unusual. The New Zealand Law Society and other experts have warned it undermines the rule of law, property rights, and investor confidence.
• The retrospective change was consulted on with the banking sector but not publicly prior to the Bill being introduced to Parliament.

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