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The Federal Court has ordered major bank Australia and New Zealand Banking Group Ltd (ANZ) to pay a $15 million fine after it admitted to misleading nearly 166,000 customers over the level of funds in their credit card accounts between 2016 and 2021.
Australian Securities and Investments Commission (ASIC) commenced civil action against ANZ last year, with the court yesterday (26 September) finding the bank breached the ASIC Act and the National Consumer Credit Protection Act by falsely indicating customers could obtain a cash advance from funds stated to be their ‘available funds’ without incurring fees and interest.
The court found ANZ had not cleared deposits into the credit card accounts, which resulted in the ‘available funds’ amount being incorrect and showing a larger balance than what was available for withdrawal without incurring fees or interest.
It said the error resulted in customers who obtained a cash advance based on these available funds being hit with fees and interest.
The court also said ANZ did not act “efficiently, honestly and fairly” by failing to take timely action to address the problem.
ASIC deputy chair Sarah Court stated: “Customers deserve clear and accurate information about available funds in their accounts and what fees and charges may be applied. Many ANZ customers relied on the account information displayed by the bank and were charged fees that were inconsistent with that information.
“These are errors that we expect a bank to be aware of and fix in a timely manner. It should not have taken ANZ several years to address this issue.
“ASIC will continue to take action against banks who fail in their duty to act efficiently, honestly and fairly in dealings with customers.”
Along with the $15 million penalty, ANZ will establish a remediation program to repay affected ANZ customers who were charged a cash advance fee between November 2018 and September 2021.
ASIC stated that over 186,000 accounts had already been remediated by ANZ for fees charged on cash advances between 2016 and 2018, where in some cases single customers were charged thousands of dollars in fees. The average remediation payment was approximately $45 per account.
ASIC said that ANZ had admitted to the contraventions, consented to orders being made, and the parties made joint submissions on liability and penalty.
In a statement ANZ said it “accepts responsibility for what has occurred and apologises to its customers, and has addressed the issues that gave rise to the contraventions”.
It added: “ANZ has cooperated with ASIC during this process and has completed its remediation program for the period of the ASIC Act contraventions.
“As part of the settlement, ANZ has agreed to further remediation for the period from November 2018 to September 2021. ANZ has also agreed to a $15 million civil penalty and to pay ASIC’s costs.”
Background to the case
The body commenced civil proceedings against the major bank in May 2022, where it alleged that between May 2016 and November 2018 approximately 165,750 ANZ customers were charged cash advance fees and interest for withdrawing or transferring money from their credit card accounts based on an incorrect account balance.
At the time, ASIC also alleged that ANZ had not adequately fixed the problem and that customers were continuing to be affected.
When commencing the civil proceedings, Ms Court stated: “We are concerned that, over a long period of time, ANZ overstated the available funds and balances on credit card accounts, and nonetheless charged fees and interest to customers who relied on this information when making withdrawals.
“This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues. We say that ANZ has been aware of the unlawful charging since at least 2018 and the problem is still occurring today.”
When commencing court action, ASIC acknowledged that ANZ had remediated over $10 million to customers who were affected up to 17 November 2018, however, added that the problem had continued with ASIC having sought orders from the court that customers who have been wrongly charged since 2018 also be remediated.