The Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) to 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.
In a statement on Wednesday, ASIC said the court found that 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.
“ANZ is a large financial institution that for many years failed to prioritise and deploy the systems and processes necessary to fulfil its obligations,” said ASIC chair, Sarah Court.
ANZ’s Breakfree package, which was introduced in 2003, offered fee waivers and 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, but these benefits were not always passed on to the customer.
In fact, the court found that ANZ had contravened the ASIC Act, the Corporations Act, and the National Consumer Credit Protection Act. In particular, the court said ANZ had 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”.
“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’s failure will result in over $211 million in remediation to impacted customers.
This matter was the final civil case filed following ASIC’s enforcement investigations arising from the royal commission, which resulted in total penalties ordered by the courts in excess of $160 million.
“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.