ANZ fined $10 million by Asic after unlawfully levelling $3 million in customer fees

Between August 2003 and September 2015, ANZ charged certain fees to personal and business customers in relation to periodic payments. Those fees included:

* fees charged for periodic payments 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).

Under the relevant terms and conditions, ANZ 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 admitted that from around 11 July 2011, as a result of receiving communications from its external lawyers, it knew there was a risk it was not contractually entitled to charge same-name fees to non-loan retail and commercial customers (affected customers). Despite knowing this risk, prior to December 2013, ANZ did not determine whether it was entitled to charge the same-name fees and continued to charge them to the affected customers until September 2015.

ANZ admitted, and the Court declared, that by charging same-name fees to the affected customers between 26 July 2013 and 24 September 2015, when ANZ lacked any contractual entitlement to charge those fees and when ANZ knew, from on or around 11 July 2011, that there was a risk it was not contractually entitled to charge those fees (charging conduct), ANZ:

* engaged in unconscionable conduct on 327,895 occasions, in contravention of s12CB of the Australian Securities and Investments Commission Act 2001 (ASIC Act);

* breached its general obligation to comply with the financial services laws, in contravention of s912A(1)(c) of the Corporations Act 2001 (Corporations Act); and

* failed to do all things necessary to ensure that the financial services covered by ANZ’s Australian financial services licence were provided efficiently, honestly and fairly, in contravention of s912A(1)(a) of the Corporations Act.

Further, ANZ admitted, and the Court declared, that by not making remediation payments after 11 December 2013 to the affected customers who had been charged same-name fees between 11 July 2005 and 31 December 2007 (remediation conduct), ANZ:

* engaged in unconscionable conduct on two occasions, in contravention of s12CB of the ASIC Act;

* breached its general obligation to comply with the financial services laws, in contravention of s912A(1)(c) of the Corporations Act; and

* failed to do all things necessary to ensure that the financial services covered by ANZ’s Australian financial services licence were provided efficiently, honestly and fairly, in contravention of s912A(1)(a) of the Corporations Act.

The Court ordered that ANZ pay pecuniary penalties totalling $10 million for engaging in unconscionable conduct in relation to the charging conduct and the remediation conduct.

ASIC Deputy Chair Daniel Crennan QC said ‘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.

‘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.’

The Court also ordered ANZ publish a notice on its website and in the Australian Financial Review regarding the Court’s findings as well as pay $1 million towards ASIC’s costs.
Background

ASIC commenced proceedings against ANZ on 25 July 2019 (19-191MR).

ANZ’s charging conduct affected approximately 69,000 customers. The total value of fees that ANZ charged these customers without contractual entitlement was approximately $3.1 million. ANZ has made remediation payments to some of those affected customers, totalling approximately $2.5 million. The remediation amount includes repayment of fees charged without contractual entitlement as well as further amounts by way of compensation on account of the time that had passed. ANZ admits that it did not or could not pay a further $637,901 in remediation payments to the remaining affected customers, which has been or will be paid to ASIC as unclaimed moneys or to charity.

ANZ’s remediation conduct related to approximately 175,000 fees. The total value of the fees that ANZ charged without contractual entitlement was approximately $3 million. Except to the extent that affected customers received payments as part of a class action settlement relating to the charging of certain periodical payment fees, ANZ has not made remediation payments to those customers.