On Tuesday (29 September), reports emerged that Australia and New Zealand Banking Group (ANZ) had begun contacting more than 200,000 mortgage customers with redraw facilities to notify them that they may have incorrect redraw balances.
The bank had reportedly identified issues with both its underlying and manual processing systems, which led to an inflation of redraw balances earlier this year.
This had the potential to enable borrowers to redraw amounts greater than their estimated revised redraw balance, and put the loan into arrears.
After being contacted by Mortgage Business to confirm the reports, a spokesperson for the major bank stated: “ANZ identified an issue that meant some customers had been able to redraw more than the amount made in early or additional repayments.
“As a result, customers may have had access to excess redraw.”
“We have also removed about $8 million in excess redraw,” the spokesperson added.
The big four bank confirmed that 200,000 accounts had been impacted, and that the bank has since been “working through the affected accounts, and progressively contacting our customers and fixing the issues”.
ANZ said the bank had so far rectified more than half the affected accounts and refunded more than $11 million to customers.
Based on the accounts that have been remediated so far, the average redraw adjustment has been $264, and the average amount refunded to affected customers has been $124, the bank said.
However, ANZ has also identified a group of 131 customers whose balances will be adjusted by more than $10,000 each.
The ANZ spokesperson said that these 131 customers would be contacted on a “specialised, case-by-case approach”.
In conclusion, the bank provided Mortgage Business with the following statement: “We have a dedicated team in place working through these matters in a considerate and thorough manner. When the bushfires and then COVID hit, we ha[d] changed and paused elements of our remediation approach to try and minimise the impact for customers during those times.”
ANZ said it has notified the relevant regulatory authorities about this matter.
Refocusing on redraw
Earlier this year, the major bank came under fire after preventing borrowers that had paused repayments under COVID-19 relief packages from accessing their redraw facilities.
At the time, the bank said it called customers who had asked to take up the COVID-19 assistance to explain that customers would not be able to access their redraw funds when their repayments are deferred but could “retain access to their redraw funds by transferring them to their ANZ transaction account before they apply for assistance”.
The redraw issue is also the second such error to impact borrowers this year, after widespread, cross-industry criticism against ME Bank after it reduced the amount borrowers could redraw from specific legacy mortgage products without forewarning customers.
Speaking to Mortgage Business earlier this month, ME Bank acting CEO Adam Crane said approximately 23 per cent of those affected customers had asked for a full or partial reinstatement of their redraw, but that the majority that were changed have been left in place.
The acting CEO said the bank has now contacted the majority of customers who had asked for their former limit to be reinstated to ensure the “health of their home loan and that they understand what their payments would be if they draw down”.
“We just want to make sure they don’t get into difficulty, which is what the driver was in the first place,” he said.
[Related: ANZ CEO laments responsible lending quagmire]