The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is in focus with ASIC launching legal action against the bank.
ASIC takes action against ANZ
The Australian Securities and Investments Commission (ASIC) has started a civil penalty proceeding relating to benefits including the fee waivers and discounts not being applied under ANZ’s break fee package, as well as system errors impacting offset account calculations.
These issues were actually raised during an ANZ case study at the Royal Commission a few years ago.
There are two main areas where ASIC is saying that ANZ didn’t do the right thing:
- Not all applicable benefits being applied under the breakfree package, including home loan, transaction account and credit card fee waivers, home loan interest rate discounts, and optional additional benefits such as discounts on insurance premiums.
- System errors affecting the calculation of offset benefits in certain circumstances, including where customers made payments into their offset accounts on weekends or non-business days.
ANZ has admitted to doing the wrong things and apologised to customers who have been impacted. The big four bank is not going to contest the case and will join ASIC in submitting a proposed penalty of $25 million to the court.
How is ANZ going to resolve things?
In terms of the financial penalty, ANZ said the remediation and proposed penalty are covered by existing provisions.
While ASIC has not alleged deliberate conduct, the bank acknowledged that its conduct fell short of expectations and has co-operated fully with ASIC during its investigation.
It has enhanced its systems and processes to address these issues and is undertaking remediation programs. The remediation for the offset account issues is complete.
ANZ has completed the majority of payments to customers impacted by the breakfree package issues. The remaining payments are expected to be made in 2022 and remediation for the optional additional benefits is being completed over 2022 to 2023.
Summary thoughts
The ghosts of the Royal Commission continue to haunt ANZ (and other big banks). ANZ has had to repay all the money it made from these wrongdoings, pay for lawyers and employees to address the problems and then it got a $25 million fine. Most expensive of all, its reputation has been damaged.
I don’t think ANZ is one of the ASX dividend shares at this stage, with limited growth potential.
