In a case that marks the end of an inquiry into financial industry misconduct, the Australian Securities and Investments Commission (ASIC) brought civil proceedings against Australia and New Zealand Banking Group Ltd (ANZ) alleging that it overcharged certain clients.
ASIC said that it sued ANZ for failing to provide fee waivers and interest rate discounts that it had agreed to in certain products.
The alleged overcharging, which took place between the mid-1990s and September 2021, affected almost 600,000 accounts and resulted in ANZ returning nearly $200 million (all figures in Australian dollars) to impacted customers.
“This case is yet another example of a widespread system failure by a major bank impacting thousands of customers,” said ASIC deputy chair Sarah Court in a release.
The alleged overcharging was detailed in a study by the Financial Services Royal Commission, which examined industry misconduct. The proceeding represents the final case that arose as part of that inquiry.
The inquiry into misconduct in the Australian financial industry published its final report in 2019, and referred a number of cases to ASIC for investigation.
“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,” Court said.
ASIC is seeking penalties and other orders against ANZ. The regulator and the bank will propose a $25 million penalty, it said.
“ANZ admits that it made false or misleading representations to customers that it had systems and processes in place that were adequate to provide customer account benefits. ANZ further admits that the bank’s systems and processes were not capable of delivering those benefits consistently and that it breached its obligations as a financial services and credit licensee to provide services honestly, efficiently and fairly,” ASIC said.
In a separate statement on Thursday, ANZ acknowledged that it’s conduct fell short of expectations.
“ANZ has admitted the contraventions and apologises to its customers who have been impacted,” the statement said. “ANZ does not intend to contest the proceeding and will join ASIC in submitting a proposed penalty of $25 million to the court.”