Kiwibank has become the fifth major bank in the region to admit failing to fully disclose its credit card fees, and as a result, faces a fine of NZ$134,000 from New Zealand's Commerce Commission.
The bank pleaded guilty to five breaches of the Fair Trading Act. This involved failing to fully inform MasterCard cardholders of the currency conversion fees, which required customers to pay fees of 2.6% of the total transaction. New Zealand banks have now paid more than NZ$22 million in relation to hidden fees.
In addition to its NZ$134,000 fine, the state-owned bank will also pay NZ$172,051 in compensation to customers, and a further NZ$10,000 to the Commerce Commission in costs.
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 banks to lower the charges, said Paula Rebstock, chair of the Commerce Commission.
ANZ National Bank, BNZ, and Westpac are among the banks fined by the commission for hidden charges. Proceedings continue against ASB, TSB, American Express, Diners Club and The Warehouse Financial Services.
The penalty and compensation paid by Kiwibank is less than that paid by other banks prosecuted for similar behavior, because the offending occurred over a shorter period of time and affected fewer consumers.