Powered by MOMENTUM MEDIA
subscribe to our newsletter

ASIC accepts enforceable undertakings from ANZ and NAB

The Australian Securities and Investments Commission has entered into enforceable undertakings with the two major banks over their “unconscionable conduct” in the Australian interbank bank bill swap (BBSW) market.

Earlier this month, the Federal Court of Australia had approved a settlement for ANZ and NAB that would require the major banks to each pay a total of $50 million.

The monetary sanction comprises $20 million to cover ASIC’s costs, $20 million to a Financial Consumer Protection Fund and a $10 million penalty.

The financial services regulator has now entered into the enforceable undertakings (EUs) with the two banks, following the court’s judgment that ANZ and NAB had attempted to engage in “unconscionable conduct”, in connection with the supply of financial services, in attempting to seek to change where BBSW was set on certain dates.

For ANZ, this was alleged to have happened on 10 occasions in the period of 9 March 2010 to 25 May 2012, and in respect of NAB, this was said to have occurred on 12 occasions in the period of 8 June 2010 to 24 December 2012.

Advertisement
Advertisement

The court also declared that each bank failed to do all things necessary to ensure that they provided financial services honestly and fairly.

The public should be ‘shocked, dismayed and indeed disgusted’

In her judgment on 10 November, the Hon Justice Jayne Jagot concluded: “It may be thought that penalties of around 76 per cent of the maximum penalty for NAB and 91 per cent of the maximum penalty for ANZ are severe. They are and they ought to be.

“NAB and ANZ, in this one regard at least, are to be commended for accepting that their conduct requires the imposition of penalties at the higher end of the range despite the obligations each has accepted in the enforceable undertakings and the costs agreements.”

However, Justice Jagot noted that both of the banks had “admitted to unethical and dishonest conduct”.

PROMOTED CONTENT


“It is difficult to convey the seriousness of what the attempts involved,” Judge Jagot said.

“Knowing the function of the BBSW in the Australian financial system and that it was relied upon as an independently established benchmark throughout the system, employees of NAB and ANZ deliberately sought to manipulate that benchmark to advantage their employer (and their own performance) over counterparties who had no means of protecting themselves from the effects of such manipulation, and had a right to expect that NAB and ANZ would deal with them fairly, honestly and in good faith.”

She lambasted the conduct as “gross departures from basic standards of commercial decency, honesty and fairness” and the employees from “two pillars of Australia’s banking system” for “manipulating the BBSW”, stating that it “bespeaks fundamental failings in the culture, training, governance and regulatory systems of both NAB and ANZ”.

The judge concluded: “The public should be shocked, dismayed and indeed disgusted that conduct of this kind could have occurred.

“The conduct involved attempts to corrupt a fundamental component of the entire Australian financial system for mere short-term commercial advantage. The conduct involved a repeated failure to fulfil what would generally be perceived as the most basic standards of honesty, fairness and commercial decency, let alone the standards that would properly be expected of these two banks. The conduct tends to undermine public confidence in the entirety of the Australian financial system.

“To achieve the object of protecting and promoting the public interest in securing compliance with the law, penalties at the higher end of the available scale, as have been agreed, are essential.”

Justice Jagot accepted the apologies of NAB and ANZ for these “serious contraventions” and their acceptance of the penalties imposed in the enforceable undertakings.

ASIC’s EU with the two banks was finalised on Monday, 20 November.

[Related: ANZ rate-rigging fine ‘doesn’t measure up’]

ASIC accepts enforceable undertakings from ANZ and NAB
mortgagebusiness

Grow your business exponentially in 2022!

Discover the right strategies to build a more structured, efficient and profitable businesses at The Adviser’s 2022 Business Accelerator Program.

Visit the website here to secure your ticket.

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The percentage of young adults looking to pay down their home loans has risen over the past five months, according to new data. ...

Despite the Reserve Bank digging its heels in on the timing of its cash rate climb, Westpac economists have predicted the right conditions w...

Customer-owned banks operate around four branches per $1 billion in assets, while the big four collectively run less than one shopfront per ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

When do you expect the cash rate to start increasing?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.