ANZ has appealed a High Court decision that ruled against it in a class action from borrowers earlier this month.
The High Court awarded summary judgment against ANZ in relation to Credit Contracts and Consumer Finance Act 2003 (CCCFA) class action proceedings. Chief executive Antonia Watson said the bank was appealing on the basis that the court incorrectly applied the law.
"We opposed the original claim because we felt strongly that the law was not intended to operate in the way the plaintiffs and the litigation funders suggested," Watson said.
The case centres on a coding error in one of ANZ's systems between 2015 and 2016 that failed to account for interest that had been accrued but not yet charged. The error resulted in loan variation letters containing incorrect information and affected around 17,000 customers, who underpaid their mortgages by $2 a month.
ANZ identified the issue itself, reported it to the Commerce Commission, and effectively wrote off the underpayments. The bank paid more than $35 million to affected customers.
Under the CCCFA between 2015 and 2019, a lender in breach of disclosure requirements had to repay borrowers all interest and fees charged during the period of non-compliance. Watson said "we maintain that the potential consequences under the High Court's interpretation of the law are disproportionate and not aligned with the purpose of the CCCFA or any actual harm caused".
ANZ estimates its maximum potential liability from the decision at approximately $125 million. In October last year, ASB agreed to pay $135.6 million to settle a class action for similar CCCFA breaches.