ANZ has issued an apology to customers after the financial regulator found the bank had committed a string of offences, including failing to refund fees charged to dead customers, not responding to customer hardship notices and failing to pay promised interest rates to thousands of people.
ANZ now faces a record fine of $80 million for unconscionable conduct in its dealings with the federal government while it was managing a $14 billion bond deal, along with a further $125 million for institutional and markets matters and $115 million in penalties for retail misconduct.
Financial watchdog the Australian Securities and Investments Commission (ASIC) announced on Monday that ANZ had admitted to misconduct over many years, and ASIC chair Joe Longo said the bank had again "betrayed the trust of Australians".
ASIC outlined ANZ's wrongdoings as:
- Incorrectly reporting its bond trading data to the federal government and overstating the volumes by tens of billions of dollars
- Failing to respond to hundreds of customer hardship notices
- Making false and misleading statements about its savings interest rates
- Failing to refund fees charged to thousands of dead customers.
Failures with financial hardship, interest and deceased estates
ASIC alleged a number of failures in ANZ's treatment of customers, including failure to respond to 488 customers who submitted financial hardship notices to the bank between May 2022 and September 2024.
Issues of unemployment, serious medical issues, bereavement and family violence were ignored, and in some cases, ASIC alleges ANZ took action to recover debts from customers even when they had not responded to the customers' hardship notices.
The bank has now paid out a total of $92,687 to affected customers through a remediation program.
Julie Davis, the senior policy and communications officer from the Financial Rights Legal Centre, told SBS News ANZ's failures to respond to these notices is a "real slap in the face" to people dealing with significant hardships.
"The people we talk to have often already been spending months and months and months cutting costs and tightening the belt and people tend to prioritise their home loan or their rent above everything else," she said.
"By the time they've reached out to a bank because they need financial hardship support for their mortgage payment or for another bill, they are living on an oily rag, some of them have not been eating properly."
Over 11 years, the introductory bonus interest for ANZ customers who opened certain new accounts was not always applied. The bank also gave inaccurate variable and fixed bonus introductory interest rates to 26,917 customers, resulting in around $480,000 in interest not paid out.
ASIC also alleges ANZ failed to refund fees charged to thousands of deceased customers between July 2019 and June 2023 and did not respond to representatives of deceased estates in the required time.
The watchdog said the extent of this issue is still unknown and "ANZ's failures are likely to have compounded the difficulties faced by loved ones dealing with the death of a family member or relative".
Davis said families dealing with loss and trauma "need banks to step up and have a compassionate approach to helping them — and we see here ANZ did the opposite".
A 2023 inquiry report by the independent Banking Code Compliance Committee (BCCC) focused on six banks, including the 'big four' — Commonwealth, ANZ, Westpac and NAB — and found the banking industry does a poor job of handling deceased estates. This included charging fees for services no longer provided and failing to treat next of kin with respect and kindness.
ANZ was sanctioned in July last year by the BCCC for charging fees to the estates of dead clients.
The committee's chair Ian Govey called the deficiencies in ANZ's compliance "deeply concerning" at the time and said publicly naming the bank for its failures was the most serious sanction the industry overseer could levy.
Record fine
ASIC said that, alongside ANZ, it will ask the Federal Court to impose $240 million in penalties, including a record $80 million penalty for its misconduct.
Longo said the proposed penalties against ANZ are the largest announced by the regulator against one entity and "reflect the seriousness and number of breaches of law" as well as the "vulnerable position" the bank put its customers in.
"Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system," he said.
ANZ chairman Paul O'Sullivan apologised for the bank's misconduct and said it had "made mistakes that have had a significant impact on our customers".
"While ASIC has not alleged that ANZ engaged in market manipulation, it's clear we have not met the standards expected of us," he said.
The bank also confirmed that it will submit a remediation plan required by ASIC to the Australian Prudential Regulation Authority by the end of the month and said it expects to spend approximately $150 million on implementing the plan.
Davis said ANZ's misconduct should be considered a "wake-up call" for all financial institutions in ensuring their systems and cultures are working for customers.
