ASIC has commenced civil penalty proceedings in the Federal Court against Australia and New Zealand Banking Group Ltd (ANZ) for failing to provide certain benefits it had agreed to give customers with offset transaction accounts or a ‘Breakfree’ package.
ASIC claims that between the mid-1990s and September 2021, ANZ failed to provide certain benefits, which included fee waivers and interest rate discounts, to approximately 580,447 customer accounts which has resulted in ANZ having to remediate nearly $200 million to impacted customers.
ASIC Deputy Chair Sarah Court said, ‘ANZ’s conduct was long standing and impacted over half a million customers. 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.’
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.
ANZ admits that it made false or misleading representations to customers that it had systems and processes in place that were adequate to provide customer account benefits. ANZ further admits that the bank’s 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.
ANZ's conduct was the subject of a case study by the Financial Services Royal Commission (Vols 1 & 2 of the interim report). This proceeding also marks the final civil case for ASIC arising from the Financial Services Royal Commission.
ASIC is seeking declarations, pecuniary penalties and other orders against ANZ. ASIC and ANZ 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.
The first case management hearing will be heard before the Honourable Justice O’Callaghan on 18 February 2022.
Editor's note 2:
The Court has ordered that the first case management hearing listed on 18 February 2022 be vacated. The matter has been listed for hearing on 4 May 2022.
Editor's note 3:
The hearing took place on 4 May 2022 before the Honourable Justice O'Callaghan. Judgment has been reserved.