Banking giant Australia and New Zealand Banking Group Ltd. (ANZ) agreed to pay A$240 million to resolve a series of enforcement allegations from regulators — including failing to pay promised interest, not refunding fees charged to deceased clients and lacking processes to support struggling customers.
In a settlement with the Australian Securities and Investments Commission (ASIC), ANZ admitted to misconduct in its dealings with both retail and institutional clients — including “engaging in unconscionable conduct” with the Australian government in a A$14-billion government bond deal, along with “widespread misconduct” with retail clients that affected almost 65,000 customers.
The proposed penalties, which require court approval, include A$125 million for the institutional and capital markets matters, and A$115 million for three retail issues: A$40 million for failing to pay promised promotional interest rates on certain accounts, A$40 million for breaching obligations in handling customer hardship notices, and A$35 million for breaches concerning deceased estates.
“The total penalties across these matters are the largest announced by ASIC against one entity and reflect the seriousness and number of breaches of law, the vulnerable position that ANZ put its customers in and the repeated failures to rectify crucial issues,” said ASIC chair Joe Longo in a release.
“There are fundamental issues with ANZ’s risk and compliance culture that require the board’s and executives’ urgent attention,” he added.
“ANZ needs to prioritize the management of non-financial risk so it can step up and do better by its customers,” said ASIC deputy chair Sarah Court.
In a release, ANZ said it has established a program within its retail division to meet its commitments to ASIC to deliver improvements in a number of areas “through a centralized governance, oversight and delivery framework.”
It also said it expects to spend A$150 million implementing a required program to remediate the underlying sources of its failures, which will be submitted to the Australian Prudential Regulation Authority (APRA) on Sept. 30. The plan aims to address the findings of an independent review that identified the root causes and behavioural drivers of shortcomings in its risk management practices and risk culture.
“The failings outlined are simply not good enough and they reinforce the case for change. It is my expectation that we see measurable improvements across the bank to better protect and care for our customers and to create a more sustainable business,” said Nuno Matos, CEO of ANZ, in a release.
“Unfortunately, some of our failings occurred when our customers were at their most vulnerable. For this we are deeply sorry, and we are making changes to better support our customers when they need us most. We have in place customer remediation programs for the issues announced today,” Matos added.