Australia and New Zealand Banking Group Limited (ANZ) has admitted to engaging in unconscionable conduct in services provided to the Australian Government, including incorrectly reporting its bond trading data by overstating volumes by tens of billions of dollars.
The bank has also acknowledged widespread misconduct across a range of products and services that affected nearly 65,000 customers.
The Australian Securities and Investments Commission (ASIC) and ANZ will ask the Federal Court to impose penalties of US$240 million in relation to four separate proceedings covering misconduct across the bank’s Institutional and Retail divisions.
The misconduct occurred over many years and was attributed to ANZ’s significant failure to manage non-financial risk throughout its operations.
The first matter concerns ANZ acting unconscionably in its dealings with the Australian Government while managing a US$14 billion bond deal, during which it overstated trading volumes by tens of billions of dollars over a period of almost two years.
The second relates to the bank’s failure to respond to hundreds of customer hardship notices, in some cases for more than two years, and the absence of adequate hardship processes.
The third involves making false and misleading statements about its savings interest rates and failing to pay the promised rates to tens of thousands of customers.
The fourth concerns the charging of fees to thousands of deceased customers and the bank’s failure to respond within the required timeframe to family members handling deceased estates.
The penalties under consideration include US$125 million for institutional and markets matters, of which US$80 million is a record penalty for unconscionable conduct, and US$115 million for the three retail-related matters.
ASIC Chair Joe Longo stated:
“Time and time again ANZ betrayed the trust of Australians. The total penalties across these matters are the largest announced by ASIC against one entity and reflect the seriousness and number of breaches of law, the vulnerable position that ANZ put its customers in and the repeated failures to rectify crucial issues. Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system.”
“There are fundamental issues with ANZ’s risk and compliance culture that require the Board’s and executives’ urgent attention. In the bond trading case, ANZ was in a trusted position and its conduct had the potential to reduce the amount of funding available to the government. This funding is used to support critical services including Australia’s health and education systems, affecting all Australians. When public funds are put at risk, every Australian pays the price.”
Since 2016, ASIC has brought eleven civil penalty proceedings against ANZ, with proposed and ordered penalties now totalling more than US$310 million.
ANZ has admitted the allegations in each of the current proceedings, but it is for the Federal Court to determine whether the proposed penalties are appropriate and to issue any additional orders.
Each matter will be considered separately by the Court.
Featured image credit: Edited by Fintech News Singapore, based on image by jcomp via Freepik
The article first appeared on Fintech News Singapore
