Australia and New Zealand Banking Group set to pay A$240m fine for misconduct

The Australian Securities and Investments Commission (ASIC) is requesting the Federal Court impose penalties of A$240m on Australia and New Zealand Banking Group (ANZ) for instances of misconduct spanning several years.

ANZ has admitted to engaging in “unconscionable conduct” in services it provided to the Australian government, such as incorrectly reporting its bond trading data to the Australian government by overstating the volumes by tens of billions of dollars.

The bank also admitted to widespread misconduct across products and services impacting nearly 65,000 customers, having failed to manage non-financial risk across its institutional and retail divisions.

The four matters ASIC has filed against ANZ concern:

• Acting unconscionably in its dealings with the Australian Government while managing a $14bn bond deal and incorrectly reporting its bond trading data to the Australian government by overstating the volumes by tens of billions of dollars over almost two years.
• Failing to respond to hundreds of customer hardship notices, in some cases for over two years, and failing to have proper hardship processes in place.
• Making false and misleading statements about its savings interest rates and failing to pay the promised interest rate to tens of thousands of customers.
• Failing to refund fees charged to thousands of dead customers and not responding to loved ones trying to deal with deceased estates within the required timeframe.

ASIC has now brought eleven civil penalty proceedings against ANZ since 2016 with proposed and ordered penalties totalling more than A$310m. The total penalties are the largest announced by ASIC against one entity.

ASIC Chair Joe Longo said: “Time and time again ANZ betrayed the trust of Australians.

“Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system.

“There are fundamental issues with ANZ’s risk and compliance culture that require the board’s and executives’ urgent attention.”

ASIC Deputy Chair Sarah Court said: “The issues we have seen reflect serious inadequacies across multiple levels and multiple divisions of ANZ and a clear failure to manage non-financial risk.

“As one of Australia’s biggest banks, customers trusted ANZ to do the right thing but, even on the basics like paying the correct interest rate, it fell short.

“If these penalties are imposed by the court, it will be a clear message to ANZ and all other banks that the cost of breaking the law is not an acceptable cost of doing business.”