ANZ, CBA cop large fines for customer rorts, excessive fees

ANZ has copped a hit of almost a quarter of a billion dollars for failing to provide promised discounts to its customers, while a CBA-owned trading platform has also been fined for rorting clients.

An Australia and New Zealand (ANZ) Bank branch and office in Martin Place, Sydney
ANZ is $236 million out of pocket after rorting customers for nearly two decades. (Image source:

ANZ Banking Corp has been fined $25 million and ordered to pay remuneration of $211 million for failing to provide promised discounts to its customers.

The Federal Court found ANZ failed to provide benefits such as fee waivers and interest rate discounts to around 689,000 accounts since the mid-1990s, with customers affected up until September 2021.

The Breakfree package offered the incentives on eligible ANZ products such as home loans, credit cards and transaction accounts and other benefits in exchange for paying an annual fee.

ANZ collected $1.9 billion in annual fees from customers who held the package from October 1, 2003, to September 30, 2021.

The court ruling comes after the Australian Securities and Investments Commission (ASIC) began proceedings against the bank in December 2021, which in turn was a result of a case study at the 2018 Hayne royal commission identifying the issue.

It is just the latest case arising from the Financial Services Royal Commission, which has since commanded more than $160 million in penalties.

The ruling against ANZ came just as the bank announced it had posted a statutory profit after tax for the full year ended 30 September of $7.1 billion, up 16 per cent on the prior comparable period.

“Having the necessary systems and processes to ensure customers are given the benefits they are promised is not an optional extra, it is a requirement,” ASIC Deputy Chair, Sarah Court, said.

“ANZ is a large financial institution that for many years failed to prioritise and deploy the systems and processes necessary to fulfil its obligations.”

The court found ANZ contravened the ASIC Act, the Corporations Act, and the National Consumer Credit Protection Act.

Justice David O'Callaghan said there was a significant delay in identifying impacted customers, and therefore remediating them.

“Although the nature of the acts or omissions comprising the contraventions was that of inadvertence, the conduct continued as long as it did because of inadequacies within ANZ’s systems, which were compounded by inaction or ineffective action.”

ANZ pointed out that the court accepted that its conduct was not deliberate, and acknowledged ANZs cooperation during the ASIC investigation.

“ANZ accepts that its conduct fell short of expectations and apologises to its customers who have been impacted, the bank said in a statement. 

ANZ’s regular Bluenotes newsletter made no mention of the fine or rorting of customers.

Banks gone bad

ANZ was not the only bank facing the wrath of the courts.

A unit owned by the Commonwealth Bank of Australia (CBA) was this week penalised by the Federal Court.

Its popular share trading platform CommSec was fined $20 million for overcharging and misleading customers.

The court also fined AUSIEX, formerly known as CommSec Adviser Services, another $7.12 million for various breaches of the market integrity rules and corporations act.

The CommSec failures included overcharging brokerage fees by a total of more than $4.3 million over 120,933 transactions. The platform had breached the ASIC act for “systemic compliance failures”.

The judge noted that these breaches were not deliberate or that they were conducted by senior management.

“The number, breadth and duration of the reported conduct when viewed in totality is significant and indicates the entities did not have adequate systems and processes in place to ensure compliance,” the Federal Court judge wrote.

In a statement, CBA acknowledged the judgment and said it had co-operated with ASIC during the investigation and court case.

"We apologise to our customers who were impacted by our mistakes. These errors never should have happened," CommSec Executive General Manager, Richard Burns, said.

CBA had repaid $6.5 million, including interest to affected customers in a remediation program that was now completed, he said.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was released to the public in February 2019.

It highlighted the need for better consumer outcomes, enhanced accountability and strong and effective regulators to restore trust in Australia’s financial system, while the Review highlighted the need for stronger protections for consumers of high-cost small amount credit contracts and consumer leases.

The Albanese Government last month said it is finalising its response to the royal commission.

“The Government is delivering on its election commitment to establish a Compensation Scheme of Last Resort to ensure Australians continue to have trust and confidence in the financial system external dispute resolution framework,” Stephen Jones, Minister for Financial Services, said.

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