On Tuesday, the Federal Court ordered ANZ to pay a $15 million penalty after the bank admitted to misleading its customers as to the funds available to them in certain credit card accounts.
The court found that ANZ breached the ASIC Act and the National Consumer Credit Protection Act by falsely indicating that customers could obtain a cash advance from funds shown to be their “Available Funds” without incurring fees and interest.
The court determined that ANZ had not cleared deposits into the credit card accounts and, as a result, the “Available Funds” amount was not correct. It instead showed a larger amount than what could actually be withdrawn without the customer being charged fees or interest.
ASIC noted that customers who obtained a cash advance based on the “Available Funds” amount had been hit with fees and interest by ANZ.
“Customers deserve clear and accurate information about available funds in their accounts and what fees and charges may be applied,” commented Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court.
“Many ANZ customers relied on the account information displayed by the bank and were charged fees that were inconsistent with that information.”
Additionally, the Federal Court found that ANZ did not act efficiently, honestly, and fairly by failing to take timely action to address the problem.
“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,” said Ms Court.
“ASIC will continue to take action against banks who fail in their duty to act efficiently, honestly, and fairly in dealings with customers.”
The bank admitted the contraventions, consented to orders being made and the parties made joint submissions on liability and penalty. The Federal Court is set to publish its written reasons for the judgement at a later date.
In a statement to the ASX, ANZ said that it “accepts responsibility for what has occurred and apologises to its customers, and has addressed the issues that gave rise to the contraventions”.
“ANZ has cooperated with ASIC during this process and has completed its remediation program for the period of the ASIC Act contraventions,” the bank said.
ANZ has provided more than $8.3 million in remediation payments to approximately 186,000 accounts that were charged cash advance fees and interest between May 2016 and November 2018.
ASIC said that, in some cases, single customers were charged thousands of dollars in fees. The average remediation paid was around $45 per affected account.
ANZ will also establish a remediation program to repay customers who were charged a cash advance fee between November 2018 and September 2021.
The bank indicated that the financial impact of the $15 million penalty, as well as ASIC’s costs and the remediation, were covered by existing provisions.
