HSBC reported 1053 instances of late initial and variation disclosure affecting 611 customers and estimated there had been a 3.5-day delay in disclosure based on a sampling of customer files affected.
Breaches found by the Commerce Commission included not giving an initial disclosure to borrowers before entering into a contract, not disclosing changes to borrowers and guarantors before they took effect, and not exercising the care, diligence and skill of a responsible lender.
The commission said in some instances when a change to a home loan was agreed between the parties – changes which could involve a change to the interest rate involved, credit term or limit, or the payment schedule – HSBC did not properly disclose the change before it took effect.
When it came to overdrafts, borrowers were not provided with initial disclosure before they entered into their temporary overdraft contracts with HSBC.
The commission’s report focused solely on breaches between June 2015 and October 2021, although some breaches involving a small number of borrowers had been found before this time.
HSBC told the commission the failure came about because the bank had mistakenly carried over its approach from the previous credit contracts law.
The commission’s report said HSBC paid out $162,772 in compensation to customers by refunding borrowers their costs of borrowing for the period they should have received disclosure.
HSBC told the commission it also took remedial action to address the disclosure errors, including updating policies and procedures, putting in place revised standardised templates, automating the disclosure process and bringing in extra quality assurance checks.
The bank also sent a “corrective disclosure” to guarantors of loans in April last year and told the commission it had not enforced any guarantees on loans where it had given late disclosure, so had not paid out any compensation to them.
