While the issue was addressed in a 2019 law change, the Government is worried that penalties for breaches before then could come out of the woodwork and end up hitting lenders disproportionately hard. It’s cognisant of the fact that a class action that’s due to be heard in the High Court, representing at least 150,000 ANZ and ASB customers for historic breaches, could cost the banks eye-watering sums – hundreds of millions, if not billions of dollars, according to the Herald’s estimates. The customers have already been reimbursed $43 million, further to the banks’ reporting the mistakes to the Commerce Commission. So any redress customers are awarded by the courts would come on top of this. It’s unusual for governments to backdate law changes. It’s even more controversial for this to be done to affect a matter before the courts. A lawyer for the class action, Scott Russell, said the proposed change represented “unprecedented political interference” in the judicial process and undermined the rule of law. His team had sunk resources into the case, fighting all the way to the Supreme Court to ensure all the bank customers affected by the breaches were automatically covered by the action, not just those who opted in. However, both MBIE and a lawyer the Herald spoke to (who has acted for ANZ in the past, but isn’t involved in the case) believed a retrospective change was justifiable in this instance. Chapman Tripp senior associate Emma Peart described the current law as potentially having “very draconian consequences”. She said customers could receive generous remedies without necessarily suffering any harm due to the incorrect disclosure. Peart believed consumers would still be protected by the law if it were tweaked to ensure breaches that occurred between 2015 and 2019 were treated similarly to those that occurred after 2019. Commenting on the class action in a regulatory impact statement, MBIE said it wasn’t obvious ANZ and ASB harmed borrowers’ abilities to make informed decisions about their loans. It noted that if the judge ended up requiring the banks to reimburse customers all their interest costs and other fees, this might prompt other customers to make claims related to historic disclosure errors. MBIE said this possibility was unsettling for lenders, noting some might struggle to absorb the costs, while others could pass them on to their customers. It said that as of August 2024, the Commerce Commission had resolved disclosure-related compliance issues with 15 lenders between 2015 and 2019. It had a further four investigations open. MBIE acknowledged there could be other instances of non-disclosure that authorities were unaware of. The effects of an unfavourable ruling for ANZ and ASB under the current law could therefore be far-reaching and costly. Accordingly, MBIE supported the change. As for the retrospective element, it said, “Providing the court with explicit discretion to deliver a just and equitable outcome is not, in our view, an objectionable kind of interference.” It said changing the law for the 2015 to 2019 window made it consistent, concluding it considered the change “justified” and impairing the rights of litigants “no more than is reasonably necessary”. Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.