Neil Sands
Banking giant ASB has agreed to pay $135.6 million to settle a class action over alleged breaches of credit disclosure rules but the lawyers behind the case say ANZ continues to defend the claim, which is the subject of controversial retrospective legislation.
The class action, launched against the two banks in 2021, involves more than 150,000 customers who sought loan variations between 2015 and 2019.
The plaintiffs argue that inadequate disclosure by the banks at the time means that, under the Credit Contracts and Consumer Finance Amendment (CCCFA), all interest payments made over the period should be refunded.
Until now, both banks have steadfastly opposed the claim, labelling it an opportunistic attempt to exploit an anomaly in the CCCFA for windfall gains, while the Reserve Bank has warned that under a worst-case scenario it could cost the financial system $12.9 billion.
The argument has been accepted by the government, which has introduced legislation to retrospectively fix the loophole in the CCCFA that is at the centre of the legal action.
However, ASB said on Tuesday that it would pay $135.6m to settle the claim, subject to High Court approval, without admitting any liability or wrongdoing.
“The settlement brings to an end four years of legal proceedings and provides certainty for us and for our customers. The agreement we’ve come to is a pragmatic way to settle this matter,” ASB Chief Executive Vittoria Shortt said.
ASB and ANZ have both previously admitted they made disclosure mistakes under the CCCFA during the relevant timeframe and agreed with the Commerce Commission to make compensation payments of $8.1 million and $35 million respectively.
The lead lawyer behind the class action, Scott Russell of Auckland law firm Russell van Hout, welcomed ASB’s move and confirmed the case against ANZ would continue.
“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,” he said.
Russell urged the government to drop its retrospective legislation.
“There was never any credible rationale for changing the law in the middle of an active court case,” he said. “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.”
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