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Kiwibank to pay $812,500 penalty for making false and misleading representations to customers – FMA

Kiwibank has been ordered to pay a $812,500 civil penalty at the High Court in Wellington for making false and/or misleading representations to some customers, following proceedings brought by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko.

Kiwibank admitted breaching the Fair Dealing provisions of the Financial Markets Conduct Act 2013 (FMC Act) earlier this year. The FMA and Kiwibank agreed the penalty reflected the seriousness of the breaches.

Justice Francis Cooke was satisfied a penalty of this amount was appropriate, noting that the contraventions occurred over a long period of time and affected a large number and proportion of customers.

Justice Cooke said that: “Such failures potentially have important market consequences. Banking customers can rightly assume that their bank has good systems and has accurately calculated and applied financial entitlements. They cannot be expected to cross-check every item on their bank statements, and there would be adverse market implications if any such expectation existed. This is particularly so when the financial impact for each individual customer is low, but where the financial benefit for the institution is higher because of the number of affected customers.

“The relevant conduct here involved negligence, and no intention to deprive customers of their entitlements. Once identified Kiwibank also brought the contraventions to the FMA’s attention, and embarked upon a process of remedying their error, and addressing its systemic failures.”

FMA Head of Enforcement Margot Gatland said: “Protecting customers from consumer harm is a priority for the FMA and the judgment recognises the significant impact of Kiwibank’s conduct. While Kiwibank embarked on its own remediation programme, and ultimately self-reported the issue, the failure of its internal systems and controls resulted in considerable customer harm over a prolonged period.”

 

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