ANZ has announced it will no longer offer its Breakfree home loan package from next month in a change that has been pitched as responding to customer demand for greater simplicity.
The bank received a $25 million fine from ASIC in December for failing to provide fee waivers to over 580,000 customers with a Breakfree package or offset transaction accounts.
ANZ will become the first major bank to abandon its home loan package which charges customers $395 per month to bundle their home loan with a credit card, bank account and offset account to receive a discounted interest rate along with other potential benefits.
“We are on a mission to improve the home loan experience for our customers, and this is a significant change that will help us reach that goal,” said ANZ group executive Australia for retail and corporate Mark Hand.
“We understand customers want more choice today about how they structure their home loans, and our new approach provides that while retaining a discounted interest rate and no annual package fee.”
In its December quarter update last week, ANZ flagged a $140 million hit to its operating income due to changes to packages within its Australian retail and commercial business.
Filings released by ASIC indicate that more than 1.42 million ANZ customers had taken up over 840,000 Breakfree packages from their launch in 2003 through to September 2021.
The Breakfree package will stop being sold to new customers from 19 March, while existing Breakfree customers will continue to receive their existing benefits until September 10.
From this date, the benefits will no longer apply but customers will retain their current interest rate discounts when converted to ANZ’s simplified home loan offering.
ANZ will offer three simplified home loan products from March with no ongoing ANZ fees and customers will be able to choose to add an offset account for $10 per month.
“This is really good news for our home loan customers who only want to pay for the products and features they value and choose to use,” said Mr Hand.
“We’ve been speaking to them, and they want simple options with a competitive interest rate and that is what we are now providing.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
