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The commission said in a statement it had reached an agreement with the state-owned bank on August 27 after Kiwibank admitted it had failed to act with the care, diligence and skill or a responsible lender.
Anna Rawlings, chair of the Commerce Commission, said under the Credit Contracts and Consumer Finance Act 2003, lenders must act carefully and responsibly in all their dealings with their customers.
This included having appropriate systems and processes in place to manage customer accounts and to support compliance with the lender's legal obligations to its customers.
"While Kiwibank had policies in place for disclosing more complex changes, its system and process failures affected the information it provided to some customers when they made simple changes, such as re-fixing interest rates or changing repayment amounts," Rawlings said.
Kiwibank reported to the commission in August last year that it had failed to have in place robust home loan variation disclosure policies, procedures and systems for certain types of home loan variations in the period before April 2019.
Customers eligible for the remediation will be contacted by Kiwibank and any enquiries should be directed to the bank.
Under the CCCF Act lenders entering into or varying consumer credit contracts after June 6, 2015 were required to meet lender responsibility principles as set out in the Act.
The lender responsibility principles require lenders to exercise the care, diligence, and skill of a responsible lender always, including during all subsequent dealings with borrowers and guarantors.
They must also treat borrowers reasonably and with respect.
Kiwibank chief executive Steve Jurkovich said it had proactively identified the issue and reported it to the Commerce Commission, and had worked constructively since then to resolve it.
"We apologise to customers and would like to reassure them that our systems and processes have been improved to ensure we deliver good customer outcomes."
He said Kiwibank would start contacting customers who are due payments under the agreement shortly and customers do not need to do anything before then.