The Federal Court of Australia has imposed a $10 million in penalties on Australia and New Zealand Banking Group Limited (ANZ) after finding that ANZ engaged in unconscionable conduct and breached its obligations as a financial services licensee.
The order sates that from August 2003 and September 2015 ANZ charged certain fees to personal and business customers in relation to periodic payments including fees that could not be made due to insufficient funds in the customer’s account (non-payment fees) and transaction fees charged for successful periodic payments (transaction fees).
The bank was not entitled to charge non-payment fees or transaction fees to customers where the periodic payment was made between two accounts held in the same customer name (same-name fees).
ANZ has admitted that from July 2011 it following communications from its external lawyers, it had knowledge on a risk it was not contractually entitled to charge same-name fees to non-loan retail and commercial customers (affected customers). However, despite knowing, ANZ continued to charge affected customers until September 2015.
ANZ has admitted that it lacked any contractual entitlement to charge those fees. With these fee charges, ANZ contravened with the Australian Securities and Investments Commission Act (ASIC Act) and breached its general obligations.
The court ordered the bank to pay a penalty in the amount of $10 million.
ASIC Deputy Chair Daniel Crennan QC commented:
The outcome and penalty imposed by the Court is a strong deterrent message and reflects ASIC’s position that ANZ lacked contractual entitlement to charge these particular fees. ASIC, through its Office of Enforcement, has held ANZ to account for this conduct.
Crennan continued:
ASIC acknowledges the cooperative approach taken by ANZ to this litigation, which allowed the matter to be efficiently resolved by the Court. It is in the public interest that parties to regulatory litigation cooperate where possible.
ANZ’s conduct has affected around 69,00 customers. The total value of fees that ANZ charged these customers without contractual entitlement amounts to $3.1 million. The bank has made remediation payments to some of those affected customers in the amount of $2.5 million.
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