Bank failed to provide promised benefits to customers for 20 years, court rules
ANZ has been hit with $236 million in penalties for failing to provide customers with promised benefits over a period of nearly 20 years.
The Federal Court ruled that ANZ had failed to provide fee waivers and interest rate discounts to about 689,000 customers. The bank now faces a $211 million remediation bill and a $25 million fine, according to a report by The Australian.
Benefits were offered to customers with offset transaction accounts and “Breakfree” packages. The Breakfree package, introduced in 2003, offered interest rate discounts and fee waivers on products including home loans, credit cards and transaction accounts. Customers paid an annual fee for these benefits. However, thousands reportedly did not receive them.
“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,” said Sarah Court, deputy chair of the Australian Securities and Investments Commission. “ANZ is a large financial institution that for many years failed to prioritise and deploy the systems and processes necessary to fulfil its obligations.”
ANZ’s case is the latest arising from the Financial Services Royal Commission, which has driven about $160 million in penalties to financial institutions, The Australian reported.
ANZ was also found to have made “false or misleading” representations to customers by claiming it had adequate systems to deliver the benefits.
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“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,” Justice David O’Callaghan said.
The court also ruled that the conduct continued for so long because of inadequacies in ANZ’s systems, compounded with inaction, The Australian reported.
ANZ was ordered to publish an adverse publicity order on its website and online banking login page.
The bank said in a statement that it had “enhanced its systems and processes” to address problems with the Breakfree package and was “undertaking remediation programs.”
“ANZ has also completed the majority of payments to customers impacted by the Breakfree package issues relating to home loans, transaction accounts and credit cards, with remaining payments expected to be made in early 2023,” ANZ said.
The bank said the Breakfree package had not been available since March 19 and was discontinued entirely on Sept. 10, The Australian reported.
“While the court accepted that ANZ’s conduct was not deliberate, and acknowledged ANZ’s cooperation during the ASIC investigation, ANZ accepts that its conduct fell short of expectations and apologises to its customers who have been impacted,” the bank’s statement said.
