Post: ANZ penalised $25 million for misleading customers and failing to provide promised account benefits

The Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) pay a $25 million penalty for failing to provide certain benefits it had agreed to give customers with offset transaction accounts or under a ‘Breakfree’ package.

The Court found ANZ failed to provide benefits such as fee waivers and interest rate discounts to approximately 689,000 customer accounts for over 20 years, with customers affected up until September 2021.

ASIC Deputy Chair Sarah Court said, ‘Having the necessary systems and processes to ensure customers are given the benefits they are promised is not an optional extra, it is a requirement. ANZ is a large financial institution that for many years failed to prioritise and deploy the systems and processes necessary to fulfil its obligations.’

This matter was the final civil case filed following ASIC’s enforcement investigations arising from the Financial Services Royal Commission. The total penalties ordered by the Courts from ASIC’s Royal Commission litigation are over $160 million. There are seven further Royal Commission cases remaining before the Courts.

‘The penalties handed down from ASIC’s Financial Services Royal Commission enforcement work should act as a reminder to financial institutions that they must invest in their systems to ensure consumers are not adversely affected or harmed,’ concluded Ms Court.

ANZ’s Breakfree package, introduced in 2003, offered fee waivers, interest rate discounts on eligible ANZ products such as home loans, credit cards and transaction accounts and other benefits in exchange for paying an annual fee. ANZ’s offset customers were entitled to interest rate reductions on eligible home and commercial loans. These benefits were not always passed on to the customer.

The Court found that ANZ had contravened the ASIC Act, the Corporations Act, and the National Consumer Credit Protection Act. In particular, that ANZ made false or misleading representations to certain customers when it represented that it had, and would continue to have, adequate systems and processes to provide them with the contractual benefits they were entitled to.

In handing down the penalty decision, Justice O’Callaghan said, ‘the nature and extent of the contraventions was such that they occurred over a substantial period of time and affected a large number of customers, leading to a significant amount of money needing to be remediated. There was also a significant delay in identifying impacted customers, and therefore remediating them. Although the nature of the acts or omissions comprising the contraventions was that of inadvertence, the conduct continued as long as it did because of inadequacies within ANZ’s systems, which were compounded by inaction or ineffective action.’

ANZ has also been ordered by the Court to publish an adverse publicity order on its website and online banking login page.

ANZ’s failure will result in over $211 million in remediation to impacted customers.

ANZ made admissions to contravening the law and the parties agreed on a statement of facts.

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