ANZ Loses High Court Class Action Over Loan Disclosure Breaches

Key facts

• ANZ Bank New Zealand faces up to $125 million in potential liability.
• The High Court ruled ANZ breached disclosure law under the CCCFA between June 2015 and May 2016.
• Approximately 17,000 mortgage customers were affected by the disclosure failings.
• The breaches involved loan variations where customers were undercharged an average of $2 per month.
• The ruling means ANZ may have to refund all borrowing costs incurred during the breach period.
• Lead representative plaintiffs could receive refunds of over $32,000 each.
• ANZ CEO Antonia Watson stated the bank opposes the ruling and is considering an appeal.
• This follows a similar class action where ASB Bank settled for over $135 million in 2024.

Bank Faces Nine-Figure Liability After Disclosure Ruling

ANZ Bank New Zealand has lost a significant class action in the High Court, potentially exposing the nation's largest bank to liabilities of up to $125 million. The judgment centres on the bank's failure to adhere to disclosure requirements for approximately 17,000 mortgage customers. This ruling underscores the stringent nature of consumer protection laws and the substantial financial repercussions for non-compliance. The court found that between June 6, 2015, and May 28, 2016, ANZ breached section 22 of the Credit Contracts and Consumer Finance Act (CCCFA). This law mandates that lenders provide borrowers with specific information whenever the terms of an existing loan are altered. While the monetary impact on individual customers was minimal, the legal framework allows for significant penalties when disclosure obligations are not met. For the lead plaintiffs in the case, the consequence of the breach meant a refund of $32,728.42, effectively stripping away all interest and fees charged during the period of non-compliance. When this principle is applied across the entire class of 17,000 borrowers, ANZ's potential exposure escalates to the upper limit of $125 million.

The Mechanics of the Breach and Its Ramifications

The core of the legal challenge stemmed from a coding error within ANZ's loan systems. This anomaly affected variation letters issued to customers, leading to an average monthly underpayment of just $2. However, under the CCCFA's strict liability provisions, the magnitude of the original error is secondary to the failure in disclosure itself. When a lender fails to provide the legally prescribed information accurately and on time, the law permits a court to order the refund of all borrowing costs accumulated during the period of the breach. This is precisely the scenario that has unfolded for ANZ, turning a minor administrative oversight into a potentially massive financial obligation. the issue to the Commerce Commission and had already paid out more than $35 million to rectify the mistake, but the court's focus was on the broader principle of reimbursement for all borrowing costs. Justice Geoffrey Venning, who delivered the judgment on May 4, 2026, affirmed that ANZ was indeed required to reimburse affected customers for all borrowing costs incurred throughout the duration of the breach. This decision reinforces that the CCCFA operates as a strict liability regime, holding lenders accountable to the letter of the law.

Litigation Funding and the Path to Judgment

The class action, brought forward by the Banking Class Action Group on behalf of 17,000 customers, was served on ANZ in September 2021. The case was significantly bolstered by the strategic deployment of litigation funding, provided by Australian firm CASL and New Zealand's LPF Group. These funders, who stand to receive between 16 and 23.5 percent of any recovery, are crucial in enabling such large-scale actions against major financial institutions. Scott Russell, the lawyer leading the case under the Banking Class Action banner, hailed the ruling as vindication for nearly a decade of work. He stated that the court's finding confirms ANZ's breach of its disclosure obligations under the CCCFA. The involvement of litigation funders was instrumental in leveling the playing field, allowing individual borrowers, who would otherwise lack the resources to challenge one of New Zealand's largest banks, to pursue their claim. ANZ's decision to litigate contrasts with ASB Bank, which faced a similar situation and opted to settle its own CCCFA class action in 2024 for over $135 million without admitting liability. The ANZ judgment, therefore, represents a formal judicial confirmation of a breach, rather than an agreed-upon resolution.

ANZ's Response and the Disproportionate Consequences Argument

ANZ chief executive Antonia Watson has expressed disappointment with the High Court's decision. The bank firmly opposes the ruling, with Watson stating that the potential consequences under the current law are disproportionate to the actual harm caused. This stance aligns with the bank's long-held argument that the CCCFA's section 22 remedy, which can lead to the full refund of borrowing costs for any disclosure breach, is an excessive response to technical errors. Watson indicated that the bank is currently weighing its options, including the possibility of an appeal. Her argument highlights a perceived legislative gap, where technical breaches, even those resulting in customers paying less interest, can trigger massive statutory penalties. The bank's position is that such outcomes are out of step with what it considers a proportionate response to the underlying error. ANZ's defence had attempted to frame the breaches as mere technical "glitches" and had lobbied for retrospective law changes to mitigate liability. However, the court held the bank to the standard of the law as it was written at the time of the breach, noting that recent government recommendations for amendments to allow "just and equitable" orders to mitigate penalties for technical errors are not retrospective.

Broader Implications for New Zealand's Banking Sector

The ANZ ruling, coupled with the ASB settlement, marks a significant moment in New Zealand's legal and financial history. Together, these two cases have resulted in, or will potentially result in, payments exceeding a quarter of a billion dollars over the same legal regime. This makes them the largest pair of bank versus customer class actions ever seen in the country. The repeated findings against major Australian-owned banks on disclosure issues raise questions about systemic compliance and regulatory oversight. The natural next step for the market is to consider whether similar class actions could be brought against Westpac or BNZ for comparable disclosure failings under the same legal framework. This could signal a new era of increased scrutiny and potential liability for financial institutions operating in New Zealand. For ANZ shareholders, the financial impact of a $125 million charge, while substantial, is considered absorbable given the bank's robust profitability. The net profit for the half-year to March stood at $1.26 billion, with a return on equity that comfortably surpasses its Australian parent. However, the reputational and regulatory ramifications of being the second major bank found wanting on disclosure are more pointed and could influence future conduct and compliance strategies.

The bottom line

• ANZ Bank New Zealand faces a potential $125 million payout after losing a High Court class action over loan disclosure breaches.
• The ruling concerns failures under the Credit Contracts and Consumer Finance Act (CCCFA) between 2015 and 2016, affecting around 17,000 customers.
• The bank is being held accountable for not providing accurate information when loan terms were varied, leading to a potential refund of all borrowing costs.
• ANZ CEO Antonia Watson has stated the bank opposes the ruling, deeming the consequences disproportionate, and is considering an appeal.
• This case follows a similar class action against ASB Bank, which settled for over $135 million, bringing the total potential payouts for both banks to over $250 million.
• The outcome highlights the significant role of litigation funding in enabling consumers to challenge large financial institutions and the strict liability nature of consumer protection laws.