The Australian Securities and Investment Commission (ASIC) announced today that Australia and New Zealand Banking Group Limited (ANZ) plans to refund $28.8 million to 376,570 retail accounts, and 17,230 business accounts, after failing to clearly disclose when certain periodical payment fees would apply.
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'Set and Forget' Fixed-Amount Payments
Periodical payments are automatic 'set and forget' fixed-amount payments put in place by the customer which are used as an alternative to direct debit arrangements and allow customers to establish a regular payment to another account. Banks may charge a fee for this service, depending on their terms and conditions.
In ANZ's case, the account terms and conditions stated that a periodical payment was a transaction to “another person or business”. This meant that transactions made by the customer to another account in the customer's name, whether with ANZ or another financial institution, were not covered by ANZ's own definition of a periodical payment. For this reason customers could not be charged the fees that would otherwise apply to periodical payments.
Reported Discovery to ASIC
ANZ discovered that it was charging fees on payments made between accounts held in the customer's own name, contrary to its definition of a “periodical payment”. ANZ subsequently reported the matter to ASIC as a significant breach of its financial services Obligations .
ASIC has acknowledged the cooperative approach taken by ANZ in its handling of this matter, and its appropriate reporting of the matter to ASIC.
Refund of Fees
As a result, ANZ will refund fees that were charged to customers for payments into another account in the customer's own name. The total amount being refunded includes approximately $25.8 million with an additional $3 million in interest.
ANZ has subsequently changed its terms and conditions to clarify instances where fees for periodical payments apply to an ANZ deposit account.
ASIC Deputy Chairman Peter Kell said: “Good fee disclosure is integral to ensuring that consumers are in an informed position about how best to manage the cost of their banking.”
The Australian Securities and Investment Commission (ASIC) announced today that Australia and New Zealand Banking Group Limited (ANZ) plans to refund $28.8 million to 376,570 retail accounts, and 17,230 business accounts, after failing to clearly disclose when certain periodical payment fees would apply.
Join the industry leaders at the Finance Magnates London Summit, 14-15 November, 2016. Register here!
'Set and Forget' Fixed-Amount Payments
Periodical payments are automatic 'set and forget' fixed-amount payments put in place by the customer which are used as an alternative to direct debit arrangements and allow customers to establish a regular payment to another account. Banks may charge a fee for this service, depending on their terms and conditions.
In ANZ's case, the account terms and conditions stated that a periodical payment was a transaction to “another person or business”. This meant that transactions made by the customer to another account in the customer's name, whether with ANZ or another financial institution, were not covered by ANZ's own definition of a periodical payment. For this reason customers could not be charged the fees that would otherwise apply to periodical payments.
Reported Discovery to ASIC
ANZ discovered that it was charging fees on payments made between accounts held in the customer's own name, contrary to its definition of a “periodical payment”. ANZ subsequently reported the matter to ASIC as a significant breach of its financial services Obligations .
ASIC has acknowledged the cooperative approach taken by ANZ in its handling of this matter, and its appropriate reporting of the matter to ASIC.
Refund of Fees
As a result, ANZ will refund fees that were charged to customers for payments into another account in the customer's own name. The total amount being refunded includes approximately $25.8 million with an additional $3 million in interest.
ANZ has subsequently changed its terms and conditions to clarify instances where fees for periodical payments apply to an ANZ deposit account.
ASIC Deputy Chairman Peter Kell said: “Good fee disclosure is integral to ensuring that consumers are in an informed position about how best to manage the cost of their banking.”
