“That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer who was happily enjoying their new home or car thanks to a bank loan.”

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The New Zealand Banking Association has welcomed the amendment Bill, saying it tidies up the existing legislation to ensure that all breaches are treated the same as those currently.

Roger Beaumont, chief executive of the New Zealand Banking Association, told the committee that minor disclosure errors – “like getting their phone number wrong” – could result in the full repayment of interest and fees under the current law.

The NZ Banking Association told the committee it had been lobbying for 10 years to overturn what it argues are “disproportionate” penalties that two previous governments have declined to legislate away.

Roger Beaumont, chief executive of the Banking Association, told the select committee that between 2015 and 2019 any lender making any mistake in the information they provided to borrowers “like getting their phone number wrong” could be subject to a draconian provision in the law that “on one interpretation” could require the lender to repay them all the fees and interest they had charged until the mistake was fixed.

Importantly, the proposed amendment to the law does not stop consumers or regulators taking action against lenders for information disclosure breaches. Nor does it stop any cases currently before the courts. It merely confirms that the courts should apply a ‘just and equitable’ approach. It would be up to the courts, as it should be.

Here, banks are already chipping in to the cost of preventing or managing a future crisis, he suggests. The Reserve Bank is raising banks’ capital requirements to “among the highest in the world” and the country has just brought in a depositor compensation scheme, paid for by the banks, to help protect people’s bank deposits, he notes.

“We’ve been calling for a co-ordinated multi-sector approach to scam prevention and consumer protection since 2023,” said NZBA chief executive Roger Beaumont.

Banking Association chief executive Roger Beaumont says it will make a difference if all participants play their part. He says particularly social media companies and digital platforms need to do what they can to interrupt scams.