The Australian Securities & Investment Commission (Asic) has initiated civil penalty proceedings against Australia and New Zealand Banking Group (ANZ)
The company is accused of failing to provide certain benefits it had agreed to give customers with offset transaction accounts or ‘Breakfree’ packages.
The misconduct is believed to have taken place between the mid-1990s and 2021, where ANZ failed to offer fee waivers and interest rate discounts to 580,447 customers which resulted in nearly A$200m (£108m, $143m, €126m) in remediation being paid to those affected.
Asic deputy chair Sarah Court said: “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.
“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 will continue to take enforcement action in relation to misconduct of this nature.”
Breach of obligations
According to the regulator, ANZ’s Breakfree package was introduced in 2003 to offer fee waivers and interest rate discounts on eligible ANZ products. But it alleges that these benefits were not always provided to customers.
The banking giant admitted it made false or misleading representations to customers, that its systems and processes were not able to deliver the benefits consistently, and that it breached its obligations as a financial services provider.
It added: “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.
“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.”
Asic is now seeking declarations, financial penalties and other orders against ANZ. The two will submit to the court that a fine of A$25m “is appropriate”.
