Role of 'lapdog' Banking Ombudsman to be reviewed

The Banking Ombudsman Commission said it would review the role of Banking Ombudsman just as it came under attack yesterday as a "toothless lapdog".

A group calling itself Bank Customer Action Collective attacked the Ombudsman Liz Brown for her failure to investigate whether National Australia Bank (NAB) had been overcharging its customers in New Zealand as it has admitted in Australia.

Banking Ombudsman Commission chairman, Sir Ian Barker said there would be a wide ranging review independent review of the Banking Ombudsman scheme.

Sir Ian admitted that "some concerns had recently been expressed about the independence of the Banking Ombudsman", and he emphasised the special importance of addressing this issue.

He said the review would be conducted by Judge Anand Satyanand, a former Parliamentary Ombudsman and District Court Judge.

NAB, which operates in New Zealand through its wholly owned Bank of New Zealand, has admitted to overcharging customers by A$80 million in Australia and 23 million euros ($41.68 million) in Ireland.

The overcharging was noticed after customers went to banking ombudsmen in those countries.

However, Ms Brown has dismissed allegations of serious overcharging of BNZ customers, saying the alleged overcharging was a "commercial decision" of the bank that obstructed her jurisdictional power.

The customer action group number "quite a few" said it only took one complaint to the Australian Banking Ombudsman for NAB to "discover" A$80m overcharging of customer accounts, "while the New Zealand Banking Ombudsman refuses to investigate ... BNZ overcharging".

The group has alleged the overcharging has been going on since 1998. Group spokesman Gray Eatwell alleges his property-farming ventures in South Westland were overcharged by $20,000.

He said if that was typical, then the amount of overcharging was at least as proportionate to NAB's overcharging in Australia. If it was not typical and systematic of all BNZ customers, then something sinister was going on to single his businesses out, he said.

A BNZ spokesman said around half the NAB overcharging related to a tax which did not apply in New Zealand. The rest applied to a product not used here. However, BNZ reviewed a similar product used here until two years ago and found 12 customers were overcharged collectively to the tune of $12,000-15,000.

The spokesman said Mr Eatwell's case goes back to the mid-1990s and "I think our view would be that it is resolved although his view is that it isn't".

Mr Eatwell alleged NAB has refused to respond to the overcharging allegations.

NAB has said National Irish Bank, which it formerly owned, would identify and refund its Irish customers "irrespective of their being unaware of the well-hidden charges made against their accounts".

"So why are New Zealand customers being ignored by this banking group?" Mr Eatwell said.

The Office of the Banking Ombudsman was established in 1992 and played what Sir Ian said was "a trail-blazing role as the first ombudsman scheme to be introduced in New Zealand outside of the public sector".

He said New Zealand banks had showed considerable courage in taking this then unprecedented step.

"Times have changed more than a little", he said.

"The banking sector has changed almost beyond recognition since the scheme was established, and we now need to establish to what extent the original mandate of the Banking Ombudsman is still relevant, and to what extent it is in need of adjustment."

Sir Ian said that Judge Satyanand would solicit submissions from a diverse range of banking, financial, and consumer organisations.

Ms Brown said that she welcomed the review, "which provides a much-needed opportunity to ensure that the scheme reflects the current reality of the fast-changing banking sector, and is also attuned to the needs of today's banking clientele".

- NZPA