ASIC mulls enforcement action against ANZ over charging fees to dead people’s accounts

ANZ is again in the corporate regulator’s sights – this time over allegations it incorrectly slugged dead customers’ accounts with fees and failed to fix glaring system deficiencies.

Outgoing ANZ CEO Shayne Elliott and ASIC boss Joe Longo may lock horns in 2025 over charges to dead customers’ accounts.

ANZ is again in the corporate regulator’s sights – this time over allegations its retail bank incorrectly slugged dead customers’ ­accounts with fees and failed to fix glaring system deficiencies in a timely manner.

The Australian Securities & Investments Commission is actively weighing launching enforcement action against ANZ in the new year, as it conducts a detailed probe within the bank’s retail ­division led by executive Maile Carnegie, according to sources.

The core matter ASIC is investigating, among other concerns within ANZ’s retail division, relates to the bank’s failure to stop or refund fees levied to deceased estates after customers’ deaths.

Almost 20,000 customers have been entangled in the matter, which also involves allegations of ANZ not responding to the representatives of deceased estates within a required 14-day period.

The Australian understands that the matter of significant deficiencies in ANZ’s treatment of deceased estates was referred to ASIC and the prudential regulator by the Banking Code Compliance Committee, prompting a sweeping regulatory investigation.

An ASIC spokesman declined to comment when asked about the investigation.

An ANZ spokesman said: “Like all financial services organisations, we are in constant dialogue with regulators about a variety of matters and any questions on specifics should be directed to ASIC.”

The latest regulatory probe involving ANZ will heap further pressure on the Paul O’Sullivan-led board to take definitive action to fix its compliance woes. The board and outgoing chief executive Shayne Elliott will front investors at an annual general meeting on Thursday in Melbourne, facing the prospect of a strike against their pay report.

That’s because several proxy advisers – which steer large investors on how to vote at AGMs – including Ownership Matters, believe executive remuneration at ANZ has not been sufficiently cut to ensure accountability for the bank’s governance issues.

Separately, the AGM may also be marred by protests ANZ cautioned on Tuesday.

The bank last week appointed former HSBC executive Nuno Matos to replace Mr Elliott as CEO in mid-2025.

ANZ’s latest run-in with ASIC comes as the regulator also considers action against the bank relating to irregular trading ahead of a $14bn government bond issued last year. ANZ was a risk manager on the issuance and separately has admitted to misreporting data to the government’s debt and cash management agency.

An Australian Prudential Regulation Authority spokesman declined to comment on any ANZ engagement. APRA did, however, in August hit ANZ with a requirement to hold $250m in additional capital due to its lax handling of non-financial risks, including cultural issues within its markets unit.

That was on top of a $500m capital overlay imposed by APRA in 2019 following the Hayne royal commission, which reflected governance shortcomings.

Swinburne University senior law lecturer Helen Bird said it was shocking ANZ was still charging dead customers fees years after the royal commission and the dissection of AMP over the same issue.

“The industry has been on notice. It’s surprising and disappointing that this practice continues,” she added.

The Australian last week revealed APRA had blasted ANZ’s handling of non-financial risks in a seven-page letter to the bank, which detailed the agency’s broad concerns with its handling of problems in its markets business and a failure to act despite regulators repeatedly raising ­issues.

The issues at ANZ will strike a chord with bank customers, reminding them of the sector’s poor handling and treatment of customers in the lead-up to the royal commission. A spate of disturbing cases aired at the commission, including that several banks charged dead people fees and more broadly levied charges where no services were provided.

AMP was among the companies that bore the brunt of the fallout from the royal commission including losing its then chief executive Craig Meller and chair Catherine Brenner.

Among the issues AMP was lambasted for was the group charging life insurance premiums and advice fees from the superannuation accounts of more than 2000 dead customers.

AMP was eventually ordered by the Federal Court to pay a penalty of $24m for those breaches. The company also paid out hundreds of millions of dollars in customer remediation in light of the royal commission.

Ms Bird, a corporate law expert, said arguments from the banking sector that the charging of dead customers’ accounts was due to poor computer systems had been dismissed by the Hayne royal commission.

“Commissioner Hayne said you’re not entitled to (the fees); if you keep taking that money it’s effectively theft,” she said.

The Banking Code Compliance Committee sanctioned ANZ in July over its treatment of deceased customer accounts, noting it breached obligations.

At the time, ANZ’s customer service operations general manager, Dan O’Neill, admitted the bank had not always met the expectations of customers. “We are investing millions of dollars to make sure we have the right staff, the right training, and the right processes in place,” he said.

Ms Bird believes ANZ should have cut Ms Carnegie’s bonus in response to the BCCC sanction and new revelations of a subsequent ASIC investigation into the fees levied on dead people’s accounts, warning it presented both a reputational risk and a compliance failure.

She said if ANZ failed to act, regulators should look at taking action under the Financial Accountability Regime.

In ANZ’s latest annual report the bank noted deceased estates had been only one issue of a number of matters it had engaged with regulators on. The bank did warn, however, of possible regulatory action over the issues.

“The outcomes and total costs associated with these possible regulatory, customer and other exposures remain uncertain,” the report said.

ANZ slashed the 2024 bonuses of Mr Elliott, institutional bank boss Mark Whelan and head of risk Kevin Corbally over the reputational damage and cultural issues surrounding the markets unit. But Ms Carnegie, who was paid about $2.2m in the year ended September 30, enjoyed much of her available short-term bonus, banking $865,000.