Payout for 48,000 Kiwibank borrowers after 'system failure'

More than 240,000 mortgage payments have been missed since April - worth about $2.2 billion....
More than 240,000 mortgage payments have been missed since April - worth about $2.2 billion. Photo: Getty Images
Kiwibank is to pay out $5.2 million to over 48,000 home loan borrowers after it reached a settlement agreement with the Commerce Commission over a self-reported system failure.

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.

Add a Comment







Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter