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16-063MR ANZ pays $212,500 penalty for breaching responsible lending laws when offering overdrafts
Australia and New Zealand Banking Group (ANZ) has paid penalties totalling $212,500 for breaching responsible lending laws in making offers of overdraft facilities to its customers.
ANZ offers an overdraft facility known as 'ANZ Assured' to existing customers in conjunction with particular transaction accounts.
Between November 2014 and January 2015, ANZ sent written offers to certain customers to enter into the overdraft facility with a specified limit of either $500 or $1,000. Customers could accept the offers via various means: by mail, phone, internet banking or by attending at a branch in person.
ASIC found that:
- for offers of a $500 limit, customers were not given an option to elect a different overdraft amount; and
- for offers of a $1,000 limit, customers were not given an alternative limit option if they responded to the offer via mail or in person at a branch.
These failures by ANZ were in breach of its obligation to make reasonable inquiries about the credit limit a customer requires – a protection aimed at ensuring that consumers can select the credit limit that meets their needs, particularly where they may need a lower credit limit than what might be on offer.
Deputy Chairman Peter Kell said, 'The requirement to make inquiries about a consumer's credit limit was a deliberate addition to the general responsible lending obligations by the Government. The requirement is designed to ensure that consumers do not end up with unmanageable debt. This case demonstrates that ASIC will impose penalties for breaching these important protections'.
The requirement to make reasonable inquiries regarding a consumer's required maximum credit limit was introduced into the National Consumer Credit Protection Act 2009 (Cth) by Parliament in 2011 to reform the practice by lenders of making unsolicited offers of credit to customers. The requirement is one way in which the law aims to ensure that consumers' requirements and objectives are met, by requiring customers to choose the amount of credit they actually need (and to think about whether they need credit at all), rather than being encouraged to apply for a suggested, and possibly unsuitable, amount (see s 130(1)(d); reg 28JA).
ANZ has co-operated with ASIC's investigation.
ASIC issued five separate infringement notices to ANZ in respect of the breaches outlined above.
The National Credit Act allows infringement notices to be issued for strict liability offences and certain civil penalty contraventions where ASIC has reasonable grounds to believe a person has contravened the provision. The payment of an infringement notice is not an admission of a contravention of the National Credit Act.