Financial Markets Authority warns Kiwibank for overcharging customers more than $900k
Since at least 2011, Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not.
Between approximately March 2005 to November 2024, different versions of Kiwibank's Fees and Limits brochures represented that customers would not be charged transaction fees on certain accounts if they were under 18 or 19 years of age or over 65.
However, since at least 2011, Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not.
Kiwibank was first alerted to the issue following a customer complaint in June 2023. Six months later a Kiwibank staff member identified the potential for the issue to be more widespread and not limited to a single customer.
The bank investigated and validated the issue before self-reporting to the FMA in August 2024.
FMA's executive director for response and enforcement Louise Unger said a bulk of the overcharging – 6400 customers for a total of $747,000 – came after the Financial Markets Conduct Act 2013 (FMC Act) came into force.
'This amount and duration is not insignificant,' Unger said.
'The responsibility is on financial service providers to clearly and accurately communicate their fees, as well as ensure that they charge fees in line with what they have promised.
'It is also important that financial service providers have appropriate policies, procedures and controls in place to identify and address any fee-related issues in a timely fashion.'
Unger said there were two main root causes for the issue.
'First, a lack of common understanding across Kiwibank about whether, and how, the fee waiver should apply to joint accounts. Second, a system design limitation where the age-based fee waivers could only be applied based on the primary account holder's age.
'We recognise Kiwibank's cooperation and proactive effort to address the issue, including notifying the FMA and remediating impacted customers (including use-of-money interest). However, our view is that, in this instance, the issue could have been identified earlier with better product governance and internal controls.'
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'We remain committed to fair and transparent banking practices and will continue to improve our processes to ensure we meet the expectations of our customers and regulators.' Since at least 2011, Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not. Between approximately March 2005 to November 2024, different versions of Kiwibank's Fees and Limits brochures represented that customers would not be charged transaction fees on certain accounts if they were under 18 or 19 years of age or over 65. However, since at least 2011, Kiwibank charged account fees on joint accounts where the secondary account holder met the age-based criteria, but the primary holder did not. Kiwibank was first alerted to the issue following a customer complaint in June 2023. Six months later a Kiwibank staff member identified the potential for the issue to be more widespread and not limited to a single customer. The bank investigated and validated the issue before self-reporting to the FMA in August 2024. FMA's executive director for response and enforcement Louise Unger said a bulk of the overcharging – 6400 customers for a total of $747,000 – came after the Financial Markets Conduct Act 2013 (FMC Act) came into force. 'This amount and duration is not insignificant,' Unger said. 'The responsibility is on financial service providers to clearly and accurately communicate their fees, as well as ensure that they charge fees in line with what they have promised. 'It is also important that financial service providers have appropriate policies, procedures and controls in place to identify and address any fee-related issues in a timely fashion.' Unger said there were two main root causes for the issue. 'First, a lack of common understanding across Kiwibank about whether, and how, the fee waiver should apply to joint accounts. Second, a system design limitation where the age-based fee waivers could only be applied based on the primary account holder's age. 'We recognise Kiwibank's cooperation and proactive effort to address the issue, including notifying the FMA and remediating impacted customers (including use-of-money interest). However, our view is that, in this instance, the issue could have been identified earlier with better product governance and internal controls.'
