A different kind of bank robbery?

By Tim Wilson

All of us recognise a good old-fashioned bank heist. A malcontent (moustachioed or not) saunters into a bank. Weapons are brandished, patrons hit the deck, and money gets chucked into a sack. Maniacal laughter follows, then police sirens.

That’s all very dramatic. But what if something just as serious is happening right now—not with a gun, but through Parliament?

Let me explain.

Parliament is considering amending the Credit Contracts and Consumer Finance Act 2003 (CCCFA), changing the rules retroactively for a class action involving 170,000 Kiwis. Collectively, they are likely owed hundreds of millions of dollars by two Australian banks. With the amendments, each case may have to be individually assessed to determine a “fair and equitable” penalty.

Some history: the Commerce Commission found that both ASB and ANZ breached the CCCFA, which, prior to amendments in 2019, required lenders to disclose conditions to borrowers or forfeit fees and interest.

The banks voluntarily paid some compensation—more than $35 million from ANZ and $8.1 million from ASB—but this only covered a fraction of the prescribed penalty.

The 2019 amendment changed the automatic penalty from full forfeiture of fees and interest to one the courts could determine. However this class action, filed in 2021, concerns breaches between 2015 and 2019.

The proposed amendment retroactively applies the 2019 changes. It explicitly targets this class action and unfairly disadvantages Kiwi consumers and the litigation funders backing them.

Retrospective law-making is rare for good reason. When it does occur, it’s to remove burdens from (or confer benefits on) citizens—not take them from corporations at the expense of citizens. An example? The Criminal Records (Clean Slate) Act 2004, which allows past convictions to be hidden from public view after seven years of good behaviour.

Our 2021 Legislation Guidelines caution that Parliament should avoid interfering with cases before the courts. Last year then-Minister for Commerce and Consumer Affairs Andrew Bayly said he wasn’t recommending the retrospective amendment without further analysis, citing “constitutional and natural justice issues.”

What changed? The current Minister, Scott Simpson, tabled the amendment, saying the class action “poses a threat to the long-term supply of consumer credit and degree of competition in the market.”

But that’s not the view of the Government’s own Regulatory Impact Statement, which said the risk to those banks was “probably not existential” and “does not involve a direct cost to the New Zealand economy.” Last year ANZ made $2.1 billion in New Zealand, and ASB made $1.4 billion. This class action will not sink them.

If the Government actually believes more breaches could be uncovered from the 2015–2019 window, and that the penalties would threaten access to banking, it could simply propose amendments that don’t apply to the current class action.

As Senior Law Lecturer Nikki Chamberlain observed, “certain principles in law … are sacrosanct. The Government … should not use its power to interfere with active litigation.” That’s one principle; blind justice is another. The law should apply equally to everyone, regardless of status or power.