Major bank sued for overstating account balances

The financial services regulator has commenced civil penalty proceedings in the Federal Court against Australia and New Zealand Banking Group Ltd (ANZ) for allegedly misleading its customers as to the available funds and balances in their credit card accounts.

The Australian Securities & Investments Commission (ASIC) alleges that, between May 2016 and November 2018, around 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. This reportedly affected the ANZ website, ANZ App and ATMs. 

Moreover, the regulator has alleged that ANZ has not adequately fixed the problem and that customers continue to be affected.   

The claims allege that:

• Between May 2016 and September 2021, ANZ made “false or misleading representations” that where a customer’s “current balance” and “available funds” were in credit, the current balance would be available to the customer for withdrawal without incurring fees or interest
• Since 24 September 2021, it has “engaged in conduct that is misleading or deceptive” by representing that where the amount of a customer’s “balance” or “funds” was in credit, the balance would be available to the customer for withdrawal without incurring fees or interest
• ANZ has failed to do all things necessary to ensure the credit activities authorised by its Australian Credit Licence are engaged in “efficiently, honestly and fairly”.

ASIC is seeking declarations and pecuniary penalties from the court.

While ANZ has remediated over $10 million to approximately 220,761 credit card accounts that were affected up until 17 November 2018, ASIC has suggested that the problem is continuing and is seeking orders from the court that customers who have been wrongly charged since 2018 also be remediated.  

It is also seeking orders that require ANZ to implement a system change so that where a payment is made to a customer’s credit card account, it is not included in their funds or balance until that amount is cleared by ANZ and available to use “without adverse consequences”.  

ASIC deputy chair Sarah Court said: “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. 

“In some cases, single customers were charged thousands of dollars in fees while the average cash advance fees and interest charged per affected account was $47.   

“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.”

ANZ has acknowledged the civil penalty proceeding relating to “fees charged to customers in some circumstances for credit card cash advance transactions made using recently deposited unprocessed funds”.
 
It said that the claim relates to “a particular situation where funds are deposited to put a credit card account into a credit balance, and a cash advance is subsequently made on the account drawing down on the credit balance before the deposit is processed”. 

“ANZ is considering the matters raised by ASIC in its concise statement,” it added, noting that it wouldn’t be commenting further on the matter as it is before the court.  

However, the date for the first case management hearing is yet to be scheduled by the court. 

The financial services regulator has been ramping up its lawsuits recently, and bumped up new criminal litigations by 28 per cent and civil lawsuits by 66 per cent in the 2021 financial year.

Indeed, it has previously indicated that, during the second half of the 2021 calendar year, the value of civil penalties imposed by the courts following ASIC proceedings reached $84.3 million, skyrocketing from the first half of 2021’s figure of $29.6 million. 

Many of ASIC’s cases involve the four major banks – with Westpac recently being ordered to pay $113 million in total fines across six lawsuits.

[Related: ANZ removes Breakfree package amid regulatory pressure]