Call for customer vigilance over Kiwibank mortgage mistakes

A Kiwibank customer who discovered their mortgage had grown because of a miscalculation is urging others to check their statements after spending months trying to resolve a minor issue.
On June 11, the Commerce Commission filed criminal charges against Kiwibank, alleging systemic breaches of the Fair Trading Act, overcharging more than 36,000 customers for fees and interest rates. It has since pleaded guilty.
The problem was self-reported by Kiwibank, which said it had carried out a remediation programme for affected customers, expected to be complete by the end of the year.
This implied customers had been made aware of the problems.
However, later that month, a Christchurch homeowner, who had a mortgage through Kiwibank subsidiary NZ Home Loans, realised their loan was $3000 higher than what they had initially borrowed.
When raised with Kiwibank and NZ Home Loans, the homeowner (disclaimer: they are married to a Newsroom employee) was told they were one of about 100 mortgagees with that problem, which related to the historical loan issue being dealt with by the Commerce Commission.
“With interest rates the way they are, and because we borrowed some extra money to renovate our house at precisely the wrong time, the amount we were paying has gone up so significantly, but then to find out that it hadn’t actually reduced our debt, and in fact had done the complete opposite, was not great.”
Getting it fixed wasn’t easy.
“It was quite odd, because when we first raised it, it took a couple of weeks for anything to happen, and I kept logging in to check, and we first had a payment of about $190 marked as interest adjustment.”
They also received a letter from Kiwibank to say some changes had been made; this is what you have been paying, this is what you will be paying as of this date.
“There was no acknowledgement that they stuffed up. There was this $190 deposit, so of course, we went back and said, ‘where’s the rest?’”
After pushing further, another payment of just over $1000 went in, but they were still short.
“In the end, I started plugging figures into various calculators to work out where we should have been at that interest rate over the period of time, then I went to the bank, and said ‘This is what I think’.
“And then just nothing happened.”
“That’s when we started escalating it. And then finally, we got the rest of the money deposited last week or the week before, and an apology from the head of lending.”
They escalated it by emailing Kiwibank chief executive Steve Jurkovich to complain, at which point it was sorted out quickly.
“It’s only just been resolved, and I first discovered it in the middle of June, so that’s been a lot of backwards and forwards over a few months to try and get it sorted. And it took my husband escalating things to as high as you can go in Kiwibank to finally get it sorted.
“It shouldn’t have taken the length of time that it did. We’re not talking hundreds of thousands here, it was $6000, which to us is a lot of money, but it was ridiculous how long it was taking to even get a response.
“It was a bit disheartening and chances are when one of our bigger loans comes off, we will be mortgaged to someone else.”
She suggested mortgagees be more proactive about checking their accounts and that the bank was taking the right amount.
“If we hadn’t picked up on it, I have no confidence that they would have until that particular facility’s fixed rate comes off in December 2025.
“The fact that they weren’t taking enough to even cover the interest, let alone the capital, is quite odd. I don’t think they would have picked up on it.”
Seeing as the problem was identified by the customer after the Commerce Commission filed criminal charges against Kiwibank, it could be inferred the bank and regulator didn’t know about it and the 100 similar cases.
Not so, says Kiwibank.
“While the customer may have identified this issue in relation to their home loan, the wider issue was already known to Kiwibank and had already been self-reported to the Commerce Commission,” a spokesperson said.
“Kiwibank is aware of the full extent of the issue, has stopped the issue impacting any further loans, and will rectify and remediate impacted customers (which would have included this customer) by the end of this year.
“Our priority throughout this process has been to make things right for our customers and we are disappointed that we have let some of our customers down with these historical issues.”