It also admitted failing to conduct affordability and suitability assessments when establishing or varying overdrafts and failing to have sufficient systems or processes in place for ensuring the required disclosure was provided for overdrafts.
TSB also self-reported and admitted breaches of lender responsibility principles, including failing to have sufficient and robust processes and controls in place to ensure compliance with the lender responsibility principles
It also admitted failing to have suitable governance arrangements in place to ensure that its overdraft products were consistently assessed for compliance with applicable lender responsibility principles.
Some of TSB’s breaches resulted in borrowers being overcharged and some in borrowers not being sent all the information that the bank should have provided.
Nelson Building Society self-reported and admitted breaches of lender responsibility principles, relating to interest overcharges.
It admitted failing to have adequate systems, processes, and controls to provide continuing disclosure and the required information and documents to borrowers and guarantors when loans were changed.
The lender also failed to conduct proper affordability assessments for 37 migrant workers.
The commission secured the three final settlement agreements before it hands over responsibility for the CCCFA to the Financial Markets Authority (FMA) from July 1 after 20 years.
“The CCCFA has been a significant function at the Commission for the past 20 years and these settlements bookend a successful portfolio of enforcement,” Commerce Commission deputy chair Anne Callinan said.
“We’ve taken action across the spectrum of lenders under the CCCFA, big and small. The constant throughout has been a focus on protecting consumers.”
Over that time, the commission has taken more than 60 cases to court, winning penalties and reparations of over $100 million in total.
Close to $90m has also been remediated back to consumers.
Notable action under the CCCFA
In April, the Co-operative Bank was handed down a $2.482m fine for charging its customers unreasonable fees across its lending products involving home and personal loans.
Around 48,249 customers were repaid more than $7.2m in remediation.
Last year, Westpac was penalised $3.64m by the High Court for breaching lender responsibility principles.
The fine arose after “multiple failures” meant customers did not receive legally required information about their loans and, in some cases, agreed interest rate discounts.
TSB has also previously fallen foul of the CCCFA after it was found to have charged unreasonable credit and default fees.
The bank was fined $2.47m and made remediation payments of around $6m to 48,000 borrowers.
In 2024, Christchurch-based lender Eagle MAN Loans was ordered to pay a $200,000 pecuniary penalty for providing high-cost loans which breached the CCCFA.
In some instances, customers were charged an interest rate of 182.5% per annum, on top of credit and default fees.