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06 August 2025

Kiwibank

Background

The case related to Kiwibank’s general terms and conditions that stated customers would not pay transaction fees on their accounts if those customers also had a home loan from Kiwibank. However, between 1 September 2005 and 31 March 2020, some 35,000 of Kiwibank’s home loan customers did not have fee waivers applied to their accounts and were overcharged a total of $1,172,639.94.

As the FMC Act came into force from 1 April 2014, the FMA’s proceedings can only cover conduct from that date onwards, capturing some 19,000 of the total affected customers and overcharged fees totalling $576,809.66.

In June 2018 the FMA and the Reserve Bank of New Zealand commenced their joint conduct and culture review of NZ registered banks. Banks were asked to provide details of any work underway to remediate any identified issues where bank conduct has resulted in detrimental outcomes for customers.

Following publication of the findings from the joint review, the FMA continued to ask banks to inspect their systems for issues. Kiwibank first identified the affected customers in or around August 2019, advised its board of the issue in October 2019 and reported the issue to the FMA shortly after.

In May 2021, Kiwibank commenced efforts to remediate all affected customers. The remediation included the amounts overcharged, plus use-of-money interest.

Timeline

August 2025

Kiwibank has been warned by the FMA for failing to apply age-based fee waivers to certain joint account customers, resulting in over $912,000 in overcharges to more than 8,600 customers over 13 years due to system limitations and internal control gaps.

October 2023

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."

December 2021

The FMA filed High Court civil proceedings against Kiwibank for making false and/or misleading representations, under the fair dealing provisions of the Financial Markets Conduct Act (FMC Act).