Kiwibank is facing prosecution for 21 criminal charges after misleading customers about its services, which it did not indicate on the stated and agreed terms.

The Commerce Commission launched legal proceedings against Kiwibank which pleaded guilty to breaching the Fair Trading Act by overcharging 35,000 customers a whopping $6.8 million.

According to the commission, Kiwibank failed to provide agreed discounts and interest-free periods to customers who had entered into package benefit deals and properly calculate customers’ regular repayments when customers requested changes to their loan in certain circumstances.

Moreover, Kiwibank failed to ensure that customers were switched to repaying loan principal at the end of agreed interest-only periods, give agreed discounts on the overdraft interest rates payable by home loan customers, and charge the correct amounts of various fees to certain loan customers.

“These failures were caused by errors in Kiwibank’s electronic systems and a lack of quality assurance checks to make sure that staff knew how to carry out the processes required and that these processes were being followed correctly,” said Anne Callinan, Commerce Commission deputy chair.

Kiwibank first identified the issue and reported it to the Commerce Commission and is now gradually refunding $9.2 million in remediation.