Banks, lies, and government favors

The National Government is considering a law change that will retroactively affect ANZ and ASB, letting them off the hook for hundreds of millions of dollars in a class action lawsuit

Image: marxist.com

I write a lot about corporations and their influence on governments. In fact, I’ve been accused of being too focused on corporations and their profits. It’s more complicated than that, people say. It’s not all about corporate money. My answer to these people is that someone needs to be as focused on corporate profits as the corporations are.

In my experience, whenever government policy feels a bit off or doesn’t seem to prioritize the good of the public or accord with public opinion or wishes, there is always corporate money and lobbying behind the policy. Always. And whenever corporations get involved in lobbying for policy, it is never in the best interest of the public. I stand by that. I have yet to see a case when a corporation will behave in the best interest of the public unless that also accords with the best interest of its profits (please let me know if you have examples). And sometimes the public evidence of corruption is so overwhelming that it really just has to be shared, and shared widely. Because if anyone doesn’t believe that our government is for sale to wealthy interests, consider the recent proposed change to banking law by the current National government.

This story was covered in depth here and I learned about it here. I won’t go into a whole bunch of detail, as you can read Bryce Edward’s in-depth synopsis and the linked articles for all the information. Basically, ANZ and ASB have found themselves running afoul of a banking law that requires them to forfeit fees and interest charged to customers if the bank makes a mistake in the terms of their loan reporting. What this means is that for the period that the mistakes were made, the bank has to reimburse borrowers the money it charged them under the incorrectly-stated loan information. They have, understandably, lobbied the government to change the law as it puts them in danger of financial penalties for any mistakes.

The law was changed in 2019 to soften the legal blow. But a new change would make the 2019 changes retroactive to the initial date of the law in 2015. Doesn’t seem like a big deal. But in reality, this change will quash an ongoing class action lawsuit against ANZ and ASB worth hundreds of millions of dollars.

So in summary: banks get sued, banks lobby government to change the law, government changes the law and makes it cover the period over which the banks are getting sued, lawsuit disappears.

As I’ve said, this is all covered in detail in Edward’s post. But what he doesn’t do, and what readers who don’t read all of his links won’t understand, is the timeline over which this incident has occurred. So I’d like to lay out that timeline simply and clearly. My goal in doing this is to put to rest any inkling that the banks are acting in good faith or that we should sympathize in any way with them or consider this just a small, reasonable law change. We should not. This is a clear-cut case of the banks being dishonest with the government and their borrowers, lobbying the government for a favor, and the government changing the law at the behest of one of the largest corporations operating in the country to save them hundreds of millions of dollars.

Let’s check out the timeline.

• June 2015-A National government, led by John Key, is in charge when the changes to the Consumer Credit Contracts and Finance Act (CCCFA) come into effect. These changes require banks to refund any interest or fees charged if they make a mistake in reporting the terms of their loans to their borrowers. They are required to refund these costs for the entire period the error was in effect.

• May 2016-ANZ realizes they have made an error in their letters detailing the terms of loans to borrowers between May 2015 and May 2016. These errors mean the bank may be liable to reimburse its borrowers a large sum of money

• May 2016-both ANZ and ASB, who also made errors in their loan letters, begin a targeted lobbying campaign through the New Zealand Bankers’ Association to change the law

• December 2016-John Key resigns as Prime Minister

• June 2017-ANZ and ASB inform the Commerce Commission of their error in their letters to their borrowers. This disclosure happened a full year after the banks became aware of their errors and after a full year of lobbying for the law change. This lobbying is confirmed by government documents, but at no point during the lobbying was the government aware of the banks’ errors.

• October 2017-John Key appointed chairman of ANZ

• 2017-the new Labour government works to change the law in the banks’ favor. Banks continue to lobby, joined by lawfirms.

• May 2018-ANZ informs its customers that it made an error and was potentially liable for interest and fees charged. Note this is a full two years after the errors were noticed by the bank.

• March 2020-the law is changed, allowing banks to apply to courts for relief from “excessive” consequences of misinformation to borrowers. The changes are not retrospective.

• 2021-A class action lawsuit is filed to recoup the charges from ANZ and ASB during the period in which they provided wrong information to their borrowers. They had sent some of the borrowers a token payment earlier that year and dissuaded them from asking for any more information.

• March 2024-the Credit Contracts and Consumer Finance Amendment Regulations 2024 bill is introduced to parliament

• March 2024-John Key resigns as chair of ANZ

• September 2024-Minister of Commerce and Consumer Affairs Andrew Bayly states that retrospective changes were not being considered in the amendment

• March 2025-the new Regulatory Impact Statement, required to be filed for all proposed bills, states that the bill will now be retrospective, with no justification or consultation for the change provided

So that’s where we sit. The two biggest banks in New Zealand, ANZ and ASB, who made $2.21 billion and $1.5 billion in profits, respectively, in 2024, stand to be let off the hook for a lawsuit worth hundreds of millions of dollars in the middle of the lawsuit.

This is a clear case of government favoritism and corporate influence. The government is intervening in an ongoing legal case to directly benefit these banks who broke the law, lied to their customers about it, and hid the fact that they had broken the law from the government, all the while lobbying for a change to the law they had broken. It doesn’t get much more brazen than that. And it just goes to show how deeply in the pockets of business this government is that they are willing to, without any justification or consultation, change a law in favor of corporations who are in the middle of a class action lawsuit.

The banks have stated that the law should be changed because it’s too burdensome or administratively taxing or too expensive or penalizes them for easy mistakes. My response. I JUST DON’T CARE. Banks have shown time and time again that the leniency they ask for will not be extended to their borrowers. If you have the power to bankrupt or foreclose on someone’s mortgage and ruin their lives due to late payments or an inability to pay your loan back, which costs tens of thousands of dollars more than the amount someone borrowed simply because you get to charge interest, don’t cry to me about administrative and financial burden. Use some of your billions in profits to make sure you get your admin straight. I frankly don’t have any tears to cry for you.

This is just one example of the corruption of the current government. I had to cover this one because it’s almost cartoonish in it’s absurdity and obvious corruption. But then again, that’s been the playbook from day one with this government. They don’t seem to be stopping any time soon. I hope their open corruption is a bridge too far for the voters come next year. Somehow I have my doubts.