ANZ makes case for ‘retrospective’ protection from class action

Tuesday, 22 July 2025

“There is no customer harm. Customers ended up better off,” ANZ chief executive Antonia Watson told MPs on the Finance and Expenditure Select Committee.

ANZ chief executive Antonia Watson told MPs it would be “clearly unfair” for roughly 17,000 borrowers who the bank had undercharged in 2015 to get “free” loans.

Watson was appearing before the finance and expenditure select committee on Monday as it continued to hold hearings into the Government’s controversial plan to make retrospective changes to lending laws.

The bill, announced by Commerce and Consumer Affairs Minister Scott Simpson in April, would change the law to limit the liability ANZ and ASB have under a class action being taken against them by thousands of their borrowers.

The law the class action plaintiffs are suing the banks under came into force in 2015. Plaintiffs say it requires lenders to refund all fees and interest charged during any period in which they were in breach of loan disclosure laws.

Both ANZ and ASB admitted disclosure breaches in 2015 and entered into settlements with the Commerce Commission in 2021, paying compensation of $35 million and $8.1m respectively. However, those settlements did not require them to make full refunds of cost of borrowing, leading to the class action being launched.

Simpson’s Credit Contracts and Consumer Finance (Amendment) Act would allow courts to apply discretion to take into account the level of harm caused by a lender’s mistake when deciding on how much compensation to award.

The Commerce Commission’s report slams NZ's banking sector for poor competition. It calls for more capital for Kiwibank, faster open banking, and better consumer choice. Finance Minister Nicola Willis promises action to address these issues.

ANZ’s mistake was to undercharge around 17,000 borrowers, Watson told MPs.

“There is no customer harm. Customers ended up better off,” Watson said.

The borrowers were not asked to pay the amounts they were undercharged by, and they got compensation, she said.

The situation was being exploited by a litigation funder under an “interpretation” of the law that would mean borrowers got a free loan.

“That’s clearly unfair,” she said.

When lending laws were last changed in 2019, government officials had justified not making the changes retrospective as there was little chance of litigation.

“Yet here we are,” Watson said.

Retrospective law change was common, when there was a good reason, she said.

The lawyers and litigation funder behind the class action protested about the plan to retrospectively change the law at a hearing of the select committee on Wednesday last week.

Davey Salmon, senior counsel for the plaintiffs in the class action, called it “almost unprecedented to close down rights” in an ongoing case.

ANZ has told MPs that it believes the courts already have the discretion Simpson’s bill proposes, and has been defending the class action claim.

ASB and ANZ have been lobbying for law change for many years, including through the Banking Association, which is the political lobby group for banks.

“While we think the court already has discretion, we encourage Parliament to make this crystal clear,” the bank said in its submission on the bill.

ASB, which was to speak at the hearings later on Monday, said in its submission there was no evidence Parliament had ever intended to require lenders to refund cost of borrowing amounts to customers, if disclosure provisions were breached.

It said that interpretation of the law could lead to “extremely harmful” outcomes for borrowers and the country, as it could create systemic risk for banks, and limit lending.

At last week’s hearings, lawyers for the plaintiffs and litigation funders told MPs that Reserve Bank Te Pūtea Matua modelling suggesting not making the law change retrospective posed a $12.9 billion risk to the financial system was incorrect.

ANZ and ASB told MPs that making the law retrospective would not stop the class action.

However, it would change the financial risk and reward for the litigation funder LPF, which told MPs in a submission that the plaintiffs were likely to receive approximately 75% to 85% of proceeds while funders assumed all financial risk.