ANZ Faces $125 Million Payout After Losing Landmark Class Action Over Loan Calculator Error

Key facts

• High Court Justice Geoffrey Venning ruled ANZ breached the Credit Contracts and Consumer Finance Act (CCCFA) in the mid to late-2010s.
• A coding error in ANZ’s loan calculator caused about 17,000 customers to be charged incorrect interest.
• the issue to the Commerce Commission and paid customers over $35 million to rectify the mistake.
• The court determined ANZ must reimburse customers all borrowing costs (including interest) for the duration of the breach.
• ANZ estimates the total liability could reach $125 million, depending on how the judgment is applied.
• ANZ chief executive Antonia Watson expressed disappointment and said the bank is considering an appeal.
• Scott Russell, the lawyer representing the customers, called the judgment an important step in holding ANZ accountable.

Court Rules Against ANZ in Class Action Over Loan Calculator Glitch

ANZ is facing a potential $125 million payout after losing a class action lawsuit brought by customers over a coding error in its loan calculators. The High Court of New Zealand ruled that the bank’s lending practices breached the Credit Contracts and Consumer Finance Act (CCCFA) in the mid to late-2010s, affecting about 17,000 borrowers. Justice Geoffrey Venning found that ANZ was required to reimburse customers all borrowing costs, including interest, for the entire period the breach was in effect. The bank had previously compensated customers with more than $35 million for the error, but the court ruled that this was insufficient under the law.

The Coding Error and Its Consequences

The case centered on a coding flaw in one of ANZ’s loan calculators that caused the bank to charge incorrect interest rates to approximately 17,000 customers. it to the Commerce Commission, subsequently paying out over $35 million to affected borrowers. However, the class action argued that ANZ was obligated to refund all borrowing costs—not just the overcharged interest—for the duration of the breach. Justice Venning agreed, stating that the CCCFA requires lenders to provide accurate information, and that ANZ’s failure to do so entitled customers to full restitution.

ANZ’s Disappointment and Potential Appeal

ANZ chief executive Antonia Watson expressed disappointment with the court’s findings, saying the bank opposed the claim because it believed the law was not intended to operate in the way the plaintiffs and litigation funders suggested. She noted that ANZ’s errors actually resulted in customers paying less interest, not more, and that they had already been compensated with over $35 million. “We maintain that the potential consequences under the current law are disproportionate and not aligned with any actual harm caused,” Watson said. ANZ is now considering whether to appeal the decision, which could delay any payouts to customers.

Customer Lawyer Hails Accountability

Scott Russell, the lawyer representing the customers in the class action, welcomed the judgment as an important step in holding ANZ accountable under consumer protection legislation. He said the next steps in the proceeding will depend on several factors, including whether ANZ appeals. “This judgment is an important step in holding ANZ accountable under consumer protection legislation designed to ensure borrowers receive accurate information about their loans,” Russell stated. The ruling underscores the strict liability lenders face under the CCCFA for providing incorrect loan information.

Financial Stakes and Broader Implications

ANZ estimates that the cost of reimbursing all borrowing costs for the affected customers could reach $125 million, though the final amount will depend on how the judgment is applied to individual cases. The bank has set aside provisions for the potential payout, but an appeal could prolong the process. The case highlights the stringent requirements of New Zealand’s consumer credit laws, which place a heavy burden on lenders to ensure accuracy in loan documentation. Legal experts say the ruling could set a precedent for other class actions against financial institutions for similar breaches.

What Comes Next

ANZ is reviewing the judgment and will decide whether to appeal to a higher court. If the bank appeals, the case could take months or years to resolve, delaying compensation for the 17,000 customers. If ANZ does not appeal, the court will determine the exact reimbursement amounts and oversee the distribution of funds. The class action was funded by litigation funders, who will likely seek a portion of the payout as part of the settlement. Customers covered by the class action will be notified of the next steps once the appeal period has lapsed.

The bottom line

• ANZ must reimburse 17,000 customers all borrowing costs for the duration of a CCCFA breach caused by a loan calculator coding error.
• The bank had already paid over $35 million but the court ruled full restitution was required under the law.
• ANZ estimates its total liability could reach $125 million, but an appeal is being considered.
• The ruling reinforces strict lender accountability under New Zealand’s Credit Contracts and Consumer Finance Act.
• Customers may face delays if ANZ appeals, prolonging the final resolution of the class action.