The Federal Court of Australia has imposed a $15 million penalty on the Australia and New Zealand Banking Group Limited (ANZ) for misleading its customers about the fees associated with certain credit card accounts. The bank had falsely indicated that customers could access their "Available Funds" without incurring any additional fees or interest, a claim that later proved incorrect.
ANZ Breaches ASIC Act
The court determined that ANZ violated both the Australian Securities and Investments Commission (ASIC) Act and the National Consumer Credit Protection Act. The bank had not accurately processed deposits into the credit card accounts, leading to an incorrect display of "Available Funds." As a result, customers who relied on this misleading information were charged unexpected fees and interest.
Sarah Court, the Deputy Chairwoman at ASIC , emphasized that customers deserve transparent and accurate account information, including any potential fees. ANZ's failure to provide this led to inconsistent charges for many of its customers. The court also criticized ANZ for not promptly rectifying the issue, stating that such errors should have been addressed much sooner.
"ASIC will continue to take action against banks who fail in their duty to act efficiently, honestly and fairly in dealings with customers," concluded Court.
Three Years of Wrongdoings
ANZ has already begun the process of remediation, affecting over 186,000 accounts. While the average remediation amount stands at around $45 per account, some customers have been charged thousands of dollars in fees. In addition to the hefty fine, ANZ will establish a program to repay customers who were wrongly charged between November 2018 and September 2021.
The bank has admitted to these violations and consented to the court's orders. Both parties have made joint submissions on liability and penalty, and the court's detailed reasons for the judgment will be published at a later date.
Beyond the $15 million fine, ANZ has made remediation payments totaling over $8.3 million for accounts charged between May 2016 and November 2018. As emphasized by ASIC in today's (Tuesday's) press release, this serves as a stern reminder for banks to act efficiently, honestly, and fairly in their dealings with customers.
ANZ Is No Stranger to ASIC Fines
As with many large financial institutions, the fine imposed on ANZ is neither the first nor likely the last the bank will face. In 2020, ANZ was charged a penalty of $7.14 million for engaging in "unconscionable conduct" and breaching its customer obligations.
Two years prior, the bank found itself in legal hot water for issues related to a share placement of $2.5 billion in 2015. The case revolved around the non-disclosure of crucial information to shareholders, specifically concerning the placement of 80.8 million shares at $30.95 each. Notably, 25 million of these shares were allocated to two of the three joint lead managers, a detail that was not disclosed to all shareholders.
Going further back to 2017, ANZ settled with ASIC over misconduct involving some of its traders. The settlement required ANZ to pay more than $50 million in penalties and payments, following a series of trading incidents that dated back to between 2010 and 2012.
