Class Action Against ASB and ANZ Banks Offers $300M Settlement in Overcharging Case

In a significant development that could reshape the landscape of consumer banking in New Zealand, a class action lawsuit involving over 150,000 customers of ANZ and ASB banks has offered to settle for more than $300 million. The claim centers around allegations that the banks overcharged customers between 2015 and 2019 due to failures in proper disclosure of fees and interest rates under New Zealand’s credit laws.

The lawsuit, which has been ongoing for four years, is being led by lawyer Scott Russell, who emphasized that the proposed settlement is intended to protect both the affected customers and the broader public from potential legal uncertainties that could arise from amendments to the Credit Contracts and Consumer Finance Act (CCCFA). These amendments, currently under discussion in the finance and expenditure select committee, have raised concerns among claimants that they could retroactively weaken their legal claims, potentially reducing or even eliminating refunds for affected customers.

According to Russell, the proposed changes to the CCCFA could allow banks to argue for reduced compensation or even negate the claims altogether, effectively giving them a “free pass” for alleged misconduct during the 2015–2019 period. This has sparked a fierce debate between consumer advocates and the banking sector, with the latter warning that not closing these legal loopholes could expose the financial system to a potential $13 billion threat.

In response to the $300 million settlement offer, ANZ has dismissed the proposal as a “stunt,” claiming it is driven more by the financial interests of litigation funders rather than the actual merits of the case. The bank also argued that the proposed resolution does not reflect the scale or nature of the underlying issue, and warned that the litigation funders are seeking a “windfall” from what they describe as “unclear and bad law.”

Meanwhile, legal representatives for the plaintiffs have pushed back against these claims, with one of the lead counsel, Davey Salmon KC, stating that the banking industry’s concerns are exaggerated. He argued that the proposed settlement is not an existential threat to the banks’ financial stability and that the claims do not pose a significant risk to their balance sheets.

It is worth noting that ANZ and ASB have already paid over $43 million to affected customers in a separate settlement with the Commerce Commission back in 2020. However, the current class action is focused on a broader range of alleged misrepresentations and overcharging practices that occurred over a four-year period.

The outcome of this case could have far-reaching implications for both the banking sector and consumer rights in New Zealand. With the settlement offer now on the table, the next steps will likely involve intense negotiations and a careful evaluation of the legal and financial ramifications for all parties involved.

As the debate over the CCCFA amendments continues, the eyes of the public and legal experts will be closely watching to see whether this landmark case sets a precedent for future consumer protection efforts in the financial industry.