The proceedings, which were filed by ASIC, mark the final case in the banking royal commission
ANZ will be facing the Federal Court in proceedings filed by ASIC in the final case under the banking royal commission.
ASIC had found that between the mid-1990s and September 2021, the bank failed to provide the benefits promised in one of its products to customers.
“This matter marks the final investigation by ASIC arising from matters considered by the Financial Services Royal Commission. A constant theme of those investigations has been the failure of large financial services entities to honour agreements with customers and to ensure proper processes and systems are in place to prevent widespread compliance failures,” ASIC deputy chair Sarah Court said in a statement published by the regulator.
Latest News
ANZ’s Breakfree package, which was introduced in 2003, offered fee waivers and reduced interest rates on home loans, transaction accounts and credit cards to those who paid an annual fee. According to 7News, ANZ collected $1.9bn in annual fees through the product from 2003 to 2021.
However, ASIC claimed that the bank did not always provide the promised benefits, with about 580,447 customer accounts being denied the perks.
The regulator acknowledged that the bank’s failures were not intentional but were due to a system that was susceptible to error and not properly monitored.
“ANZ’s conduct was long standing and impacted over half a million customers. These customers were entitled to receive the benefits they signed up for and in many instances paid for. This case is yet another example of a widespread system failure by a major bank impacting thousands of customers,” Court said.
Nonetheless, she expressed her disappointment that the misconduct continued well after the royal commission concluded.
“The nature of the misconduct, the amounts of money involved and the numbers of customers affected were completely unacceptable,” Court said in a statement published by the AFR.
ANZ conceded to having made false or misleading representations that its systems could deliver benefits consistently and to breaching its obligations to provide financial services honestly, efficiently and fairly.
“ANZ has enhanced its systems and processes to address these issues and is undertaking remediation programs. The remediation program for these offset account issues is complete,” the bank said in a statement published on 9 December.
The bank has had to repay nearly $200m to affected customers.
“ANZ has 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 2022 and remediation for the optional additional benefits being completed over 2022-2023,” the bank said.
If the court deems it appropriate, ANZ has also agreed to pay an additional $25m as a penalty.
The first case management hearing is still awaiting the setting of a hearing date, according to ASIC.