Fee waivers not applied to joint accounts
Kiwibank has been formally warned by the Financial Markets Authority (FMA) for failing to apply fee waivers to certain joint account customers.
Between March 2005 and November 2024, the bank’s Fees and Limits brochures said customers under 18 or 19, or over 65, would not pay transaction fees on certain accounts.
However, since at least 2011, Kiwibank charged fees on joint accounts where only the secondary account holder met the age criteria.
“The responsibility is on financial service providers to clearly and accurately communicate their fees, as well as ensure that they charge fees in line with what they have promised,” said Louise Unger (pictured), FMA’s executive director for response and enforcement, in a media release.
“It is also important that financial service providers have appropriate policies, procedures and controls in place to identify and address any fee-related issues in a timely fashion.
We encourage all customers to raise concerns with their financial services provider if they notice any unexpected fees.”
The warning comes as Kiwibank prepares for the next phase of its planned $500 million capital raise, which the government has approved to support expansion and stronger competition with the big four Australian banks.
Over 8,600 customers impacted
Kiwibank identified the issue after a June 2023 complaint and confirmed it was widespread by December 2023, leading to a self-report to the FMA in August 2024.
“In this case, Kiwibank overcharged 8,663 customers a total of $912,053.79 between July 2011 to November 2024,” Unger said.
“For the approximately 10-year period post-1 April 2014, when the Financial Markets Conduct Act 2013 (FMC Act) came into force, Kiwibank overcharged 6,400 customers a total of $747,000. This amount and duration is not insignificant.”
FMA, which recently released review into access to financial advice across New Zealand, found the charges likely breached the FMC Act fair dealing provisions because they misrepresented the bank’s right to charge these fees.
Root causes and regulatory warning
Unger said the overcharging stemmed from two main issues:
- Lack of common understanding across Kiwibank about how age-based fee waivers applied to joint accounts.
- System design limitations that only applied waivers based on the primary account holder’s age.
“We recognise Kiwibank’s cooperation and proactive effort to address the issue, including notifying the FMA and remediating impacted customers (including use-of-money interest),” Unger said. “However, our view is that, in this instance, the issue could have been identified earlier with better product governance and internal controls.”
FMA warning is intended to maximise deterrence and support confident, informed participation in New Zealand’s financial markets, a key theme in the 2025 Financial Conduct Report.
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