Bank refunds $1.73m after wrongly charging 7,300+ business customers

More than 7,300 TSB business customers were charged a fee they should not have paid over a six-year period, prompting the bank to refund $1.73 million.

According to a report by 1News, the Financial Markets Authority (FMA) has issued a public warning against TSB after the bank incorrectly charged a 25-cent fee on certain business cheque transactions. Under the bank’s own terms and conditions, those transactions were not meant to attract a fee.

The incorrect charges were applied between November 30, 2017, and November 20, 2023.

FMA acting head of perimeter and response Trish Millward said customers had no practical way of identifying the error themselves.

"Customers should be able to trust that a bank charges them only what its terms and conditions say it will," she said.

"TSB's customers had no practical way to check these fees for themselves, and the overcharging went on for six years," as quoted by 1News.

Millward said the case highlighted the importance of ensuring banking systems accurately reflect changes made to customer terms and conditions.

"When financial institutions make changes to their terms and conditions, they need to ensure that their systems can deliver those changes to their customers," she said, 1News has quoted.

"Financial institutions need to ensure their systems and processes support fair customer outcomes," 1News has quoted.

The issue stemmed from changes TSB made to its business cheque terms and conditions in November 2017. The changes were intended to clarify the bank’s fee structure, but certain transactions were left out of the updated terms while the bank’s systems continued to charge customers for them.

TSB chief executive Kerry Boielle apologised to those affected.

"TSB acknowledges the Financial Markets Authority's warning about a historic (2017-2023) issue involving fees charged on some business cheque accounts," she said, 1News has quoted.

"We are sorry to the customers affected. We have refunded impacted customers and strengthened our processes to ensure our fees are clearly described and charged correctly," as quoted by 1News.

Refunds largely complete

The FMA said TSB had identified the issue itself, cooperated with its investigation and had largely completed repayments to affected customers.

According to 1News, the regulator said its decision to issue a public warning rather than take further action reflected TSB’s cooperation, while also considering the six-year duration of the overcharging and delays in reporting the issue and completing the refunds.

TSB discovered the problem internally in August 2023 and stopped the incorrect charge in November that year. The bank verbally notified the FMA in December 2024 before providing written notification in February 2025, as reported by 1News.

Of the $1.73 million paid in remediation, $1,425,127 was made up of fee refunds, while $10,404 covered associated interest and charges. A further $299,269 was paid as compensation for the use of customers’ money over the period.