Co-Operative Bank Admits Charging Unreasonable Fees, Remediates Thousands Of Customers $7.225 Million

Co-operative Bank has admitted breaches of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and remediated 48,249 customers $7.225 million for charging higher fees than it should have.

The bank has entered into a settlement agreement with the Commerce Commission, and the Commission’s claims will now go to the High Court, which will decide the pecuniary penalty.

It comes after the Commission concluded an investigation into Co-operative Bank Limited and filed proceedings in relation to the charging of unreasonable fees under the CCCFA.

Commerce Commission Director, Credit Sarah Bartlett says banks have a responsibility to charge reasonably and customers should be able to trust that this is always the case.

“Charging unreasonable fees doesn't just erode trust in the banking sector – it has a direct and tangible impact on consumers’ wallets, often hitting those least able to absorb unexpected costs,” Ms Bartlett says.

Co-operative Bank charged twelve unreasonable fees across its lending products involving home loans and personal loans, including Home Loan Establishment Fees and Overdraft Facility Fees, with most being charged during the period of 6 June 2015 to 30 November 2021.

"Co-operative Bank’s conduct fell short of what we would expect from a responsible lender,” Ms Bartlett says.

“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 ongoing work to ensure compliance with consumer credit laws and to ensure people are able to borrow money safely and fairly.”

Ms Bartlett says it’s important that Co-operative Bank remediated affected customers, including following the Commission’s action.

"It is always our priority to deliver real outcomes for people,” she says.

Background

The Commission opened an investigation into Co-operative Bank after the bank first alerted the Commission to the concerns it had about the fee amounts it had charged customers. The Commission has obtained further information during the subsequent investigation.

A full list of relevant fees which the Commission considered to be ‘unreasonable’ is below:

Home Loan Establishment Fee
Restructure Fee (also referred to in the relevant period as the Home Loan Top Up Fee)

Home Loan Variation Fee

Revolving Credit Facility Fee

Early Repayment Fee (also referred to in the relevant period as the Early Full/part Repayment Fee)

Security Discharge Fee (also referred to in the relevant period as the Full or Partial Mortgage Discharge Fee)

Mortgage Discharge Fee (also referred to in the relevant period as the Mortgage Discharge Fee (where no loan balance) Fee)

Rates Demand Fee

Personal Loan Establishment Fee

Vehicle Loan Establishment Fee

Overdraft Facility Fee

Cash Advance Fee (also referred to in the relevant period as the Fair Rate Credit Card Cash Advance Fee)

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