New Zealand FMA Warns TSB Bank Over Business Cheque Overcharging

New Zealand's Financial Markets Authority (FMA) has issued a warning about TSB Bank Limited after the bank charged fees on business cheque transactions that were not subject to fees under its own terms and conditions.

Between 30 November 2017 and 20 November 2023, TSB charged a $0.25 fee on some business cheque transactions that should not have attracted the fee. The error affected 7,309 customer accounts. TSB has repaid a total of $1.73 million, covering the fees, related interest and charges, and compensation for the use of that money over time.

TSB changed the wording of its Business Cheque terms and conditions in November 2017. The change was intended to make the fees clearer, but it omitted some transactions that the bank's systems continued to charge for. As a result, what customers were told they would be charged and what they were actually charged did not match for an extended period.

"Customers should be able to trust that a bank charges them only what its terms and conditions say it will," said FMA Acting Head of Perimeter and Response, Trish Millward. "TSB's customers had no practical way to check these fees for themselves, and the overcharging went on for six years. When financial institutions make changes to their terms and conditions, they need to ensure that their systems can deliver those changes to their customers. Financial institutions need to ensure their systems and processes support fair customer outcomes."

The FMA acknowledged that TSB reported the issue itself, worked constructively with the FMA, and has largely finished reimbursing customers.