‘We undercharged customers and paid out $35 million,’ ANZ boss tells parliamentary select committee

Neil Sands

The mistake that led to ANZ Bank facing a class action seeking hundreds of millions of dollars involved customers being undercharged and actually left them better off, chief executive Antonia Watson said on Monday.

Speaking in favour of retrospective legislation that would hobble the class action against ANZ and ASB, Watson told Parliament’s Finance & Expenditure Select Committee that the bank had more than made good on its error.

“Due to a faulty loan calculator, we undercharged some customers by, on average, $2 a month for a year,” she said.

“We found the error, we fixed it and we told our regulator. We wrote off the underpayments and we paid out $35 million. There is no customer harm. Customers ended up better off.

“Now a litigation funder is exploiting a legal interpretation that Parliament recognised was flawed in 2019 and tried to fix. They claim that any error in disclosure, no matter how small, means repaying all the interest and fees on loans during the time of the error. A free loan – that’s clearly unfair.”

The Credit Contracts and Consumer Finance Amendment (CCCFA) Bill aims to fix an anomaly in credit rules that means lenders who made disclosure mistakes about loan variations between 2015 and 2019 are potentially liable to refund customers all interest payments and fees over that period.

Instead of applying a blanket penalty for disclosure infringements from 2015 to 2019, the amendment changes the standard the court applies for compensation to ‘just and equitable’.

It specifically targets the class action currently underway against ANZ and ASB, Simons & Ors v ANZ Bank New Zealand Limited and ASB Bank Limited CIV 2021-404-1190, which involves more than 150,000 customers.

Litigation funder LPF Group, which is backing the case, argues it goes against well-establish principle to apply retrospective law to a live case, accusing the government of caving to pressure from banking lobbyists.

LPF has offered to settle the case if ANZ and ASB each pay $300m, which both have declined.

The Reserve Bank estimates the finance sector could take a hit of up to $12.9 billion if the law is not amended, a figure LPF hotly disputes.

Watson said ANZ raised concerns about how the legislation was worded back in 2019. “Officials told us at the time the risk of lawsuits for period were overblown, yet here we are,” she said.

“The [amendment] makes the law consistent and fair for everyone before or after 2019. It does not extinguish any rights. I cannot stress that enough and the current case can also still go ahead.”