ANZ sanctioned over treatment of dead customer accounts and breaches of code

ANZ was called out for the most ‘serious and systemic breaches’ by the Banking Code Compliance Committee, after taking years to stop or refund fees levied to deceased estates.

The committee’s Ian Govey said ANZ’s customer remediation did not meet expectations.

The Banking Code Compliance Committee has sanctioned ANZ for the most “serious and systemic breaches” under its remit, after the bank failed to stop or refund fees levied to deceased estates after customers’ deaths.

The committee used a statement on Tuesday to hit out at ANZ for breaching its obligations under the code and not responding to representatives of deceased estates within a required 14-day timeframe.

That related to instructions or requests for information from the representatives of deceased estates.

“The significance of the deficiencies in ANZ’s compliance frameworks was deeply concerning. Its non-compliance warranted such a sanction,” BCCC chair Ian Govey said.

“The decision to name ANZ for its non-compliance reflects the seriousness of its code breaches.

“Naming a bank is a sanction that we reserve for the most serious and systemic breaches.”

While the naming of a bank may not seem a harsh sanction, the Australian Sec­urities & Investments Commission or other regulators can choose to take further action against banks for breaches of the code should they deem it warranted.

The issues at ANZ will remind bank customers of the sector’s poor handling and treatment of customers in the lead-up to the Hayne royal commission, where the sector was entangled in a range of scandals including charging dead people fees and levying charges where no services were provided.

Tuesday’s sanction also throws into question whether banks learned the lessons of the royal commission, despite having to refund customers billions of dollars.

 To remediate on fees, ANZ is this time paying almost $3.3m to 18,852 impacted deceased estates, with that amount including $391,486 as compensation for the period of time the estates did not have use of the funds.

ANZ also sent letters to some 10,604 estates to apologise for delays in responding to information requests or action. More than 1400 estates will receive financial compensation on that topic.

The code sanction follows ANZ last week being granted approval to acquire Suncorp’s banking arm, albeit with extra conditions imposed on the transaction by Jim Chalmers.

ANZ is, however, grappling with several compliance issues. The bank is yet to satisfy the prudential regulator that its governance and compliance efforts are sufficient enough to warrant the lifting of an extra $500m capital overlay the bank must hold.

National Australia Bank had its $500m capital overlay, ­imposed in 2019, removed in March when the Australian Prudential Regulation Authority said it was satisfied the bank had completed its remediation program and addressed governance issues.

APRA separately has an open file on ANZ in relation to the bank’s alleged rigging of government borrowing rates.

The BCCC on Tuesday said despite ANZ identifying customer issues around deceased estates in early 2022, it took more than a year to implement solutions and almost two years to start a customer remediation program.

The remediation effort “is still ongoing” and expected to be finalised by the end of July 2024, it added. “The remediation did not meet expectations. Once aware of the issues, ANZ did not act with sufficient urgency to remediate the affected customers. It should have done more,” Mr Govey said.

ANZ’s customer service operations general manager Dan O’Neill admitted customers and their families or representatives expected “compassionate and timely” support.

“We know we have not always met the expectations of our customers and their families at a difficult time in their lives. For too many, it has been a frustrating experience. For this we are sorry, and committed to continuing to make changes to better support our customers and their representatives,” he said.

“We are investing millions of dollars to make sure we have the right staff, the right training, and the right processes in place. Already we have made 16 distinct improvements, with a further seven changes already in train.

“Where we have made a mistake and charged fees in error, we review what has occurred and remediate the customer in full as soon as we can. For most impacted customers, these processes have been completed.”

The committee noted that ANZ’s remediation included drawing on assumptions that were beneficial to customers, including reimbursing charges that may already have been refunded.

It also found another bank had breached obligations “by failing to stop or refund certain fees charged to deceased estates after customers’ deaths” but said for that case the sanction from the committee was to formally warn that institution about its conduct.

The sanctions followed the committee’s inquiry last year that probed the banking sector’s compliance with its obligations for deceased estates in the Banking Code of Practice. Three investigations came about as a result and the committee noted the third was expected to conclude soon.

“Our inquiry and investigation work promotes code compliance, holds banks accountable to commitments, and ensures banks take appropriate action to make things right for customers,” Mr Govey said.

Originally published as ANZ sanctioned over treatment of dead customer accounts and breaches of code