The Australian Securities and Investments Commission (ASIC) has filed a civil penalty lawsuit against Australia and New Zealand Banking Group (ANZ) for misleading customers.
ASIC claimed that the lender failed to provide certain benefits, including fee waivers and interest rate discounts, to about 580,447 customer accounts under its ‘Breakfree’ package between the mid-1990s and September this year.
This resulted in ANZ having to pay about A$200m ($143m) to impacted customers in remediation.
ANZ introduced its ‘Breakfree’ package in 2003. The package offered fee waivers, interest rate discounts on eligible ANZ products such as home loans, credit cards and transaction accounts and other benefits in exchange for paying an annual fee.
ASIC deputy chair Sarah Court said: “ANZ’s conduct was long-standing and impacted over half a million customers. These customers were entitled to receive the benefits they signed up for and in many instances paid for.
“This case is yet another example of a widespread system failure by a major bank impacting thousands of customers. This matter marks the final investigation by ASIC arising from matters considered by the Financial Services Royal Commission.
“A constant theme of those investigations has been the failure of large financial services entities to honour agreements with customers and to ensure proper processes and systems are in place to prevent widespread compliance failures.”
ANZ admitted that it has misled customers and its systems and processes were not capable of delivering the benefits it has promised.
The bank has apologised to its impacted customers, and filed a joint statement together with ASIC, with mutually agreed facts and admissions with the Federal Court.
ANZ said that it has enhanced its systems and processes to address the issues and will cooperate with the regulatory agency’s proceeding.
It is currently undertaking remediation programmes and will submit a proposed penalty of A$25m ($17.8m), covered by its existing provisions.
