ANZ hit with $10m fine for ‘unconscionable conduct’

ASIC says the bank engaged in unconscionable conduct on more than 300,000 occasions.

ANZ acknowledged the outcome of the case and said it was engaged in remediation measures. Picture: NCA NewsWire/Bianca De Marchi

ANZ has been hit with a $10m fine by the Australian Securities & Investments Commission for unconscionable conduct on more than 300,000 occasions.

The corporate regulator on Friday said that ANZ breached the obligations of its financial services licence between 2003 and 2015 when it charged customers fees when periodic payments could not be made due to insufficient funds, and when they were successful.

However, under ANZ’s terms and conditions, it was not permitted to charge these fees when the payments occurred between two accounts held by the same person or entity.

ANZ realised it was at risk of contravening these conditions in 2011, but the bank did not investigate whether it was acting incorrectly until December 2013 and did not cease charging same-name fees until 2015.

ASIC said that by charging same-name fees between July 26 2013 and September 24 2015, when the bank knew it had no contractual obligation to do so, it engaged in unconscionable conduct on 327,895 occasions and breached its obligation to comply with financial services laws.

Approximately 69,000 customers were wrongly charged $3.1m.

ANZ has admitted to this and admitted that by not making remediation payments to certain customers charged same-name fees between 2005 and 2007, it contravened the Corporations Act on two occasions and engaged in unconscionable conduct a further two times.

In recognition of the breaches and instances of unconscionable conduct, the court fined ANZ $10m, with the bank to pay $1m of costs towards ASIC.

ASIC deputy chair Daniel Crennan said the fine stood as a strong deterrent against unconscionable behaviour.

“The outcome and penalty imposed by the court is a strong deterrent message and reflects ASIC’s position that ANZ lacked contractual entitlement to charge these particular fees. ASIC, through its Office of Enforcement, has held ANZ to account for this conduct,” he said.

“ASIC acknowledges the cooperative approach taken by ANZ to this litigation, which allowed the matter to be efficiently resolved by the court. It is in the public interest that parties to regulatory litigation co-operate where possible.”

ANZ said it “had previously conducted a remediation program in relation to periodical payment fees charged over the period since 1 January 2008 and, since 2016, has made or will make payments totalling over $49m.

“Certain periodical payment fees were also the subject of a class action which was settled in December 2018, with ANZ paying approximately $760,000.”