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16-291MR ANZ to refund nearly $29 million to more than 390,000 accounts as a result of unclear fee disclosures
Australia and New Zealand Banking Group Limited (ANZ) is refunding $28.8 million to 376,570 retail accounts, and 17,230 business accounts, after it failed to clearly disclose when certain periodical payment fees would apply.
Periodical payments are automatic 'set and forget' fixed-amount payments put in place by the customer. They are an alternative to direct debit arrangements, and allow customers to establish a regular payment to another account (for example, to make fortnightly rental payments). Banks may charge a fee for this service, depending on the terms and conditions for the account.
In ANZ's case, the account terms and conditions stated that a periodical payment was a transaction to 'another person or business.' This meant that transactions made by the customer to another account in the customer's own name, whether with ANZ or another financial institution, were not covered by ANZ's own definition of a periodical payment and could not be charged the fees that could otherwise apply to periodical payments.
ANZ discovered that it was charging fees on payments made between accounts held in the customer's own name, contrary to its definition of a 'periodical payment'. ANZ subsequently reported the matter to ASIC as a significant breach of its financial services obligations. ASIC acknowledges the cooperative approach taken by ANZ in its handling of this matter, and its appropriate reporting of the matter to ASIC.
As a result, ANZ will refund fees that were charged to customers for payments into another account in the customer's own name. These fees include:
- non-payment fees charged on personal and commercial accounts when the payment did not proceed because of insufficient funds held in the ANZ deposit account; and
- payment fees charged on commercial accoumts when a payment is processed from the ANZ deposit account.
The total amount being refunded includes approximately $25.8 million of fees, with an additional $3 million in interest.
ANZ has subsequently changed its terms and conditions to clarify instances where fees for periodical payments apply to an ANZ deposit account.
ASIC Deputy Chairman Peter Kell said, 'Good fee disclosure is integral to ensuring that consumers are in an informed position about how best to manage the cost of their banking.'
ANZ has commenced contacting affected customers to explain the impact and the reimbursement and expects to complete the remediation process by the end of September 2016.
Customers with queries or concerns about this matter should contact ANZ on 13 13 14 (for retail customers) and 1800 801 485 (for business customers).
ASIC incorrectly described the circumstances in which ANZ reported the breach to ASIC. At the time ANZ first reported the matter to ASIC it did not do so as a significant breach of its financial services obligations pursuant to s912D of the Corporations Act 2001.