Jenee Tibshraeny: NZ Herald Wellington business editor on ANZ declining offer to settle class action lawsuit

ANZ has declined a proposed settlement by lawyers leading a massive class action against the bank for giving customers the wrong information about their loans.

The lawyers asked ANZ to agree to pay a penalty of up to $300 million, on top of the $35 million it has already paid more than 100,000 customers to compensate them for the error.

ASB, which is also subject to the class action, is yet to respond to the proposal for it to also make a payment of up to $300 million.

NZ Herald Wellington business editor Jenee Tibshraeny explains further.

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Episode Transcript

Speaker 1 (00:00):
Am Z has said no thanks to an offer to
settle a class action lawsuit for the core price of
three hundred million New Zealand dollars. Plaintiffs offered a deal
to both am Z and ASB. ASB Z to respond
to the proposal, but am Z has said that genetip
Training is the heralds Wellington Business editor and is with
me now hyjene hey Ryan. So how would this deal

(00:21):
work exactly? Am Z and ASB would both individually be
on the hook for three hundred million or is it together?

Speaker 2 (00:28):
It's three hundred million each. So A and Z has
said no thanks. ASB is still considering it. Basically, under
the current law they could actually be liable for much
more than that. It could be more than six hundred
million combined. But the controversial thing here is that the

(00:50):
government is changing the law in such a way that
the banks could be liable for much less, much less
than even six hundred million. So that's the big issue
here because normally when governments change the law, it's changing
the law for the future. But the thing here is
that they wanting to change the law to the way
it's applied to the past, specifically to a period between

(01:14):
twenty fifteen and twenty nineteen, so that's when the breaches
around this court case happened.

Speaker 1 (01:20):
Yes, so retrospective law that could completely put the kibosh
on this case that they're taking right.

Speaker 2 (01:28):
Well kind of. So under the current law, if banks
just disclose the wrong information about your loan, the starting
point for the penalty is that they have to repay
you all your borrowing costs for the time of the breach.
So you know, in this case there could be about
one hundred and fifty thousand people involved, I think of
all the interests they've paid over the time of a breach.
But you know that that could really mount up. The

(01:50):
way the government wants to change the law is to
say that the judge has can have discretion to have
a proportionate penalty, so to have a fair penalty. So
you know, in this case, if under the proposed new law,
for the judge looks at it and says, oh, actually,
this was really bad, the banks could still face a
really big penalty, or the judge could go, oh, it's
not that bad. Actually, you know what, We're sure a

(02:12):
smaller penalty. Now the banks have already actually reimbursed customers
for the losses because of the mistakes sort of in
the order of about forty million dollars. So you know,
the amount that it could be under the existing law
is much larger than the forty million.

Speaker 1 (02:29):
The Government's obviously trying to get these changes through the
at the moment being heard in Select committee this week.
Act in New Zealand First on board with the retrospective
part of it.

Speaker 2 (02:40):
Well, they have their reservations. I spoke to New Zealand
First Shane Jones today and he said, you know, he
wouldn't judge jump to conclusions, but it's very very bad
practice to change something retrospectively. He said that New Zealand
First would you know, still have a think about whether
it would support the bill, you know, further down the

(03:01):
parliamentary process. Acts David Seymour, he said he actually wrote
to Scott Simpson, the Minister, and raised his concerns, but
David Seymour said, he's part of the government and you
know we'll kind of go along with you know, he's
not going to kick up a stink necessarily. So I
think there's still, you know, some uncertainty there. It's interesting

(03:21):
here because there's so much money at stake, you know,
banks massive players. They're lobbing hard. The lawyers who are
bringing the class action forward, there's a lot for them
to gain as well. The funders of the class action.
They are pushing really hard. It's going to be interesting
to see which way the politicians end up end up going, yeah, what.

Speaker 1 (03:42):
Have you made of the submission so far on this committee?

Speaker 2 (03:45):
Well, sitting in Select committee today, and they're pretty passionate. Again,
I think it's because there's a lot of money at stake.
You know, on the one hand, it's fair that they're
large penalties for banks because you know, if you're just
a person, are you meant to go through your mortgage
contract with a fine tooth comb and make sure all
the details are correct? So that's a fair fair argument.

(04:07):
But then you know, the banks say, if the penalties
are too heavy handed, that could cripple them, like it
won't cripple A and Z and ASP, but it could
cripple some smaller lenders. So there are some pretty strong
arguments I think being made. And the retrospectivity element is
it's just not good. No, you can't pull the rug
out from beneath people.

Speaker 1 (04:26):
That doesn't seem fear does that. But that's obviously what
they're what they're trying to weigh up at the moment, Janay,
I appreciate your time tonight, Janet to Trainey, the Herald's
Wellington Business editor, with us for more from Heather Duplessy
Allen Drive. Listen live to news talks'd be from four
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