Judge 'not happy' with ANZ fine for failures that caused 'distressing stories'

ANZ has two weeks to show how it has improved deceased estate compliance, after a judge declared he was ‘not happy’ with the $35m fine ASIC imposed for charging dead customers.

ANZ CEO Nuno Matos. Picture: NewsWire / Martin Ollman

A judge has demanded to know why the corporate cop failed to take any compliance action after ANZ charged dead customers and did not adequately respond to loved ones administering deceased estates.

Justice Jonathan Beach took the Australian Securities & Investments Commission to task as he scrutinised the $240m penalty it struck with ANZ in mid-September over widespread misconduct.

Justice Beach, who on Wednesday finished a two-day hearing into the record fine in the Federal Court, was particularly critical of ASIC’s apparent lack of ongoing enforcement since 2023.

“You don’t really know whether the systems (that) were put in place in September 2023 are actually working well. Why are you just seeking an adverse publicity order, distinct from a proper compliance program to get this properly audited, to see that it’s going to work into the future?” he asked ASIC’s counsel, Fleur Shand.

He suggested to Ms Shand that ASIC was “taking a lot on faith” that ANZ had rectified its problems and expressed disbelief that no compliance order had been sought upon evidence of “this litany of failures”.

Justice Beach told ANZ’s counsel Michael Rush, KC, that he was “just not happy” presented with a $35m component of the $240m fine brokered for mishandling accounts belonging to dead customers.

“I understand what’s gone on in the past. I suppose I’m more interested in what’s the state of the systems now? Are they working for the future?” Justice Beach asked.

Mr Rush said ANZ had been “proactive in engaging with the regulator” about admitting its failures and he insisted that $35m was a “very substantial penalty”.

However, Justice Beach said he would not be questioning the size of the fine had ASIC imposed a compliance order.

“ASIC seems to have done very little since September 2023 and so all I have is the penalty… I’m just left a bit up in the air as to what it is in the material…that can satisfy me that, going forward, this problem has been adequately rectified?”

ANZ has two weeks to provide more information about its own internal compliance programs relating to deceased estates. Justice Beach reserved his judgment, with no date set for a decision.

ANZ CEO Nuno Matos has apologies for past regulatory failings that did not occur under his watch. Picture: NewsWire / Martin Ollman

He had earlier expressed disbelief that ANZ failed to act on warnings about dealing with deceased estates despite them being addressed by the Hayne Royal Commission five years ago.

“You have the banking royal commission that is identifying this as a core problem – not just for the ANZ (but) all of the majors. You have the banking code modified and the ANZ doesn’t put in place systems to reflect all of this (and) doesn’t start looking at it seriously until, what, 2022?” Justice Beach said.

ASIC’s barrister Ms Shand agreed.

“It is very extraordinary that a bank such as ANZ, which obviously has very large resources and compliance teams and processes, hadn’t set up these systems as at 1 July 2019,” Ms Shand said.

Justice Beach said that the failings were “not just a question of money”. “You read some of the distressing stories… It’s very much an emotional, psychological issue for people dealing with these estates, dealing with these accounts,” Justice Beach said.

Ms Shand added the number of deceased estates that were impacted could not be quantified because of ANZ’s lack of systems.

University of Wollongong law professor and regulatory compliance analyst Andy Schmulow criticised ASIC chair Joe Longo, who struck the deal with ANZ and is stepping down in May.

“There is such a long pattern of ASIC’s failure to enforce the law and Justice Beach has effectively confirmed that the $240m fine is ‘mate’s rates’,” Professor Schmulow said.

“The fact they can refer to it as a ‘record fine’ just shows that they don’t hand out any big fines at all. $240m represents around 7 per cent of the maximum $3.3bn fine available to them.”

Originally published as Judge 'not happy' with ANZ fine for failures that caused 'distressing stories'