New Zealand Financial Markets Authority secures BNZ enforceable undertaking over misleading interest calculations and NZD 2.6 million payment

The New Zealand Financial Markets Authority announced that Bank of New Zealand has admitted breaching fair dealing rules by misleading customers about how interest was calculated on some non-profit accounts and has agreed to pay NZD 2.6 million to the Crown through an enforceable undertaking. The issue arose because BNZ's terms and conditions were updated in 2014 to say interest would be calculated daily, but from December 2014 to February 2024 the bank instead calculated interest on those accounts using the lowest monthly balance, leaving customers with less interest than they were entitled to. A total of 23,103 customers were affected and about NZD 5.39 million in interest was underpaid. BNZ identified the issue in September 2023 after a customer query, self-reported it to the Financial Markets Authority and remediated customers with payments of about NZD 5.44 million, including use of money interest. The bank also admitted that its terms and conditions and customer statements made misleading representations in breach of the Financial Markets Conduct Act, updated its terms, stopped offering the accounts in February 2025 and moved customers to new products. BNZ further committed to maintain policies, processes, systems and controls aimed at supporting good customer outcomes and preventing similar issues, in line with expectations under the Conduct of Financial Institutions regime.