Government bill to limit ANZ and ASB legal liability in lawsuit

Tuesday, 8 April 2025

The Government has introduced a bill designed to limit the liability ANZ and ASB have under a class action being taken against them by thousands of their borrowers.

The Credit Contracts and Consumer Finance Amendment Bill would retrospectively change a law banks have long campaigned to have be reversed.

The law brought in during the term of former prime minister John Key required lenders to pay back all interest and fees on loans on which they had failed to meet all their legal disclosure obligations.

ANZ and ASB both face a class action lawsuit over disclosure failures covered by the law, with borrowers seeking all their interest and fees on their loans repaid to them, which would add up to millions of dollars.

The bill would change the law retrospectively so the courts would be able to apply discretion to ensure an outcome that “is just and equitable in the circumstances, irrespective of when the failure occurred”.

The bill says: “This retrospective change applies to existing proceedings that have not been finally disposed of by a court of first instance before the change commences. This includes the current litigation Simons & Ors v ANZ Bank New Zealand Limited and ASB Bank Limited.”

Commerce and Consumer Affairs Minister Scott Simpson acknowledged it was “unusual” for a bill to interfere with a case before the courts, but he described the current law as a “really bad law” with a punitive effect.

Simpson said it meant that if a lender forgot to include their address on a loan document, even if everything else was correct and the borrower wasn’t affected, they could be forced to cancel all interest and fees until the mistake is fixed.

“That’s like being fined for forgetting to write your return address on an envelope, even though the letter still gets delivered,” he said.

Simpson said the bill would not change the outcome of the class action, but would give the courts the power to apply discretion over any awards payable to borrowers.

Scott Russell, the lawyer taking the class action, said he was “absolutely shocked” at the move, which he said completely undermined the case.

Russell said the original draft of the bill released last year did not include the portion making it retrospective.

“The banks have managed to get this in by the back door without public consultation,” he said.

“They never even consulted us,” he said.

The move is part of a raft of reforms introduced in three bills that will get their first readings in Parliament.

They include the Government moving to take more control over financial services disputes schemes like the Banking Ombudsman, including the ability to set requirements to ensure they have “effective and impartial” boards.

The Banking Ombudsman was criticised last year over the composition of its board, which gives big banks an effective veto on any motion they do not like.

The Financial Service Providers (Registration and Dispute Resolution) Amendment Bill would give the Government the power to determine how independent reviews of the disputes schemes were carried out, and also give it regulation-making power to set requirements for the skills, experience, and independence requirements of board members.

The Credit Contracts and Consumer Finance Amendment Bill would also end the Commerce Commission’s role as the watchdog for lending laws, transferring the duty to the Finance Markets Authority.