ASIC sues ANZ again

The corporate watchdog has once again taken Big Four Bank ANZ (ASX: ANZ) to court, this time suing it for failing to provide promised benefits to more than 580,000 customers.

It comes after separate legal action was launched by the Australian Securities and Investment Commission (ASIC) two weeks ago over alleged lending failures arising from referrals through its home loan ‘introducer program’ and from unlicensed individuals outside the program.

This latest case sees ASIC allege ANZ failed to provide certain benefits it had agreed to impart to customers with offset transaction accounts or a ‘Breakfree’ package.

The alleged failures date back to the mid-1990s until September 2021, with ASIC claiming ANZ failed to provide fee waivers and interest rate discounts to approximately 580,447 customer accounts which has resulted in the bank remediating nearly $200 million to those impacted.

“ANZ’s conduct was long standing and impacted over half a million customers,” ASIC deputy chair Sarah Court said.

“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. ASIC will continue to take enforcement action in relation to misconduct of this nature.”

By background, ASIC says ANZ’s Breakfree package, introduced in 2003, 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 alleges that these entitlements were not always provided to customers.

ASIC also alleges that ANZ’s offset customers were entitled to interest rate reductions on eligible home and commercial loans but they were also not always provided to customers.

According to the watchdog, ANZ has admitted to making false or misleading representations to customers that it had systems and processes in place that were adequate to provide customer account benefits.

It also admits that its systems and processes were not capable of delivering those benefits consistently and that it breached its obligations as a financial services and credit licensee to provide services honestly, efficiently and fairly.

ASIC is seeking declarations, pecuniary penalties and other orders against ANZ. The watchdog and the bank will submit to the Court that a penalty of $25 million is appropriate.

The date for the first case management hearing is yet to be scheduled by the Court.

In a statement ANZ said it had enhanced its systems and processes to address the issues raised by ASIC and was undertaking remediation programs.

“While ASIC has not alleged deliberate conduct, ANZ acknowledges its conduct fell short of expectations and has co-operated fully with ASIC during its investigation,” ANZ said.

“Given that these issues are now the subject of Court proceedings, we will not be making any further comment.”

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