Westpac bank will refund $1.3 million to around 60,000 customers after it overcharged them.
The bank said an internal review found it incorrectly applied fee waivers to tertiary and graduate banking accounts for 10 years up to 2017.
Westpac New Zealand consumer banking and wealth general manager Gina Dellabarca said as soon as it found the issue, it told regulators it may have broken the law and set out a plan to tell customers and compensate them.
“We apologise to all the customers affected, most of whom we have already refunded,” Dellabarca said.
“In most instances the individual amounts are small and are the result of errors in manual processes. We have now changed our systems.”
In February, it had to repay 32,000 customers a total of $5.7m, after it overcharged credit card customers. So far this year it has paid about $7m incorrectly applied discounts.
The Financial Markets Authority (FMA) and the Commerce Commission had entered into an enforceable agreement with Westpac, which required it to fix the problem and compensate customers.
FMA head of regulation Liam Mason said the regulatory requirements were working as intended.
“Westpac recognised its possible breaches and approached us. This is the kind of behaviour we expect to see from market participants.”
Commerce Commission chair Anna Rawlings said the incident showed the need for banks to be prepared.
“We emphasise the importance of robust systems and sound monitoring practices to help avoid errors and to quickly identify and fix them if they occur.”
A review of the banking sector by the FMA and Reserve Bank’s last year found no widespread misconduct in the industry but showed banks needed to improve their systems to identify and fix consumer problems.