Federal Court orders ANZ to pay $15m penalty after misleading credit card customers

The Federal Court has ordered one of the country’s largest banks to pay $15m after misleading nearly 200,000 customers as to the funds available in certain credit card accounts.

The Federal Court has ordered ANZ to pay a $15m penalty after admitting to misleading customers as to the funds available in certain credit card accounts.

The court found ANZ breached the ASIC Act and the National Consumer Credit Protection Act by falsely indicating customers could obtain a cash advance from funds stated to be their “Available Funds” without incurring fees and interest.

In addition to the $15m penalty and new remediation program, ANZ has provided remediation payments of more than $8.3m to approximately 186,000 accounts that were charged cash advance fees and interest between May 2016 to November 2018.

In some cases, single customers were charged thousands of dollars in fees, while the average remediation paid was around $45 per affected account.

Legal action was brought on by the corporate regulator Australian Securities & Investments Commission after it alleged that ANZ customers were charged cash advance fees and interest for withdrawing or transferring money from their credit card accounts based on an incorrect account balance.

ASIC deputy chair Sarah Court told The Australian that ANZ’s breach was sadly another example of systematic failure in financial institutions that has had a “significant impact” on customers.

“We see this behaviour come up time and time again. By taking these steps we can send a message to these institutions that there is no excuse for conduct that impacts customers unlawfully,” she said.

ASIC deputy chair Sarah Court said customers deserve better. Picture: Ian Currie/NCA NewsWire

The court found ANZ had not cleared deposits into the credit card accounts, meaning the “available funds” amount was incorrect and was showing a larger amount than what was available for withdrawal without incurring fees or interest. Customers who obtained a cash advance based on these available funds were hit with fees and interest.

Ms Court said that customers were entitled to clear and accurate information about available funds in their accounts and what fees and charges may be applied.

“Many ANZ customers relied on the account information displayed by the bank and were charged fees that were inconsistent with that information,” she said.

ANZ has also been found to have not acted efficiently, honestly and fairly by failing to take timely action to address the problem.

“These are errors that we expect a bank to be aware of and fix in a timely manner. It should not have taken ANZ several years to address this issue,” Ms Court said.

The ruling comes after the bank was fined $10m by the Federal Court in March in relation to noncompliance with its Home Loan Introducer Program.

ANZ said in a statement that it accepts responsibility for what occurred and apologises to its customers, and has addressed the issues that gave rise to the contraventions.

“ANZ has co-operated with ASIC during this process and has completed its remediation program for the period of the ASIC Act contraventions,” the statement said.

In addition to the $15m penalty, ANZ will establish a remediation program to repay affected customers who were charged a cash advance fee between November 2018 and September 2021.