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ASB is to pay more than $4 million in fines and compensation after admitting it breached the Fair Trading Act by not properly disclosing currency conversion fees to customers.
It is the sixth major bank to plead guilty in a Commerce Commission-led crackdown on the practice, which has now cost New Zealand banks more than $26 million.
ASB agreed it had failed to disclose fees of up to 2.35 per cent on credit and debit card currency conversions between March 2002 and March 2005. In the Auckland District Court on Thursday, it pleaded guilty to 26 charges of breaching the act and was fined $600,000. It agreed to place $3.5 million in a compensation fund for customers and pay $80,000 in costs.
The commission said New Zealand banks had now paid out over $26 million in relation to the hidden fees.
Other prosecutions involved ANZ, National, BNZ, Westpac and Kiwibank. Proceedings continue against American Express, Diners Club, TSB and The Warehouse Financial Services. Affected ASB customers used ASB Bank, Bank Direct, Sovereign Go, NZ Home Loans and AA MasterCard cards, and will be compensated next month.
Commission chairwoman Paula Rebstock said: "Banks must be upfront about all their fees and charges, so that customers can shop around and get the best deal, and in doing so put pressure on the banks to lower charges."
She said the commission was also investigating the reasonableness of late payment penalty fees on credit cards.
- NZPA
