Kiwibank settlement with Commerce Commission
Kiwibank has reached a settlement with the Commerce Commission relating to the disclosure of currency conversion fees on Kiwibank MasterCards. The fees were incurred by customers using their Kiwibank MasterCards for foreign currency transactions between 9 May 2003 and 1 September 2005.
Kiwibank acknowledges that its disclosure of fees on these transactions was inadequate at the time, and did not meet the requirements of the Fair Trading Act 1986. Kiwibank is the fifth of the major banks to reach settlement with the Commerce Commission. Several other banks and financial institutions are subject to similar proceedings.
"Kiwibank recognises that the disclosure of fees and charges on foreign currency transactions was not acceptable, despite being the industry standard at the time," Paul Brock, Acting Chief Executive said.
"We regret that our disclosure did not meet the standards of the Fair Trading Act, and unreservedly apologise for any inconvenience caused to customers. We will be working quickly to contact all affected customers and make payment of the compensation due to them."
"Kiwibank has carefully reviewed its disclosure of fees and charges, and has been fully compliant with New Zealand standards since September 2005. We wish to reassure our customers that the low interest rate Kiwibank MasterCard remains a safe, convenient and cost effective form of payment, both domestically and internationally."
By agreement with the Commerce Commission, the Bank will pay compensation of $172,051 to affected customers, along with a fine of $134,000. The compensation amount is a pro rata portion of the currency conversion fees paid by each customer during the relevant period. Any funds remaining at the conclusion of the settlement process will go to a charity to be nominated by the Commerce Commission. The fund will be subject to independent audit.
Payments to existing Kiwibank customers will be made via direct credit during June and July. Affected customers who no longer bank with Kiwibank will be contacted by mail and associated advertising. These customers can choose to have payment credited into their nominated New Zealand Bank account, to receive the funds by bank cheque or to donate the funds to charity. Customers will have until 18 September, 2007 to respond. After this time, any remaining funds will be forwarded to charity.For further information: