The Co-operative Bank has admitted to charging unreasonable fees over several years and has repaid $7.225m to 48,249 customers following a Commerce Commission investigation. The bank self-reported the issue, prompting the regulator to launch a detailed review of its historical lending practices.
The Commission said the bank charged unreasonable amounts for 12 fees across home loans, personal loans, home loan establishment fees and overdraft facilities, with most affected customers charged between 6th June 2015 and 30th November 2021.
Commerce Commission director for credit Sarah Bartlett said banks must ensure fees are fair and lawful.
“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,” she said. Bartlett added that the bank’s conduct “fell short” of what was expected from a responsible lender.
“It failed to undertake regular fee reviews and invest in adequate systems, processes and controls to ensure it complied with the law,” Bartlett said. “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.”
The Commission’s claims will now go before the High Court, which will determine an appropriate penalty. Both parties are aligned on the recommended amount.
Co-operative Bank chief executive Mark Wilkshire said the bank acknowledged the failings and had worked to remediate customers. “We take our responsibilities to customers very seriously, and we regret that some of our historical practices did not meet the standards required,” he said.
“We identified the issue, self-reported it to the Commission, and have worked hard to put things right for affected customers, both present and past. We’re committed to doing better for our customer-owners.”
Wilkshire said the bank is in the final stages of contacting all affected customers. The Co-operative Bank noted it had already provisioned for potential penalties and did not expect the issue to impact its annual results.