ANZ Proposes Record Misconduct Penalty with ASIC
The Australia and New Zealand Banking Group (ANZ) has agreed with the Australian Securities and Investments Commission (ASIC) to propose a combined penalty of $240 million in connection with four separate incidents of misconduct. This proposal marks the largest penalty ever secured by ASIC against a single entity. The penalties will be finalised by the Federal Court in separate hearings for each misconduct case.
ANZ’s Unconscionable Dealings with the Australian Government
The most egregious and costly among the misconduct incidents involved ANZ acting unconscionably while managing a $14 billion bond deal for the Australian Government. The bank reportedly overstated its bond trading data to the government by tens of billions of dollars over a span of nearly two years. ANZ and ASIC have agreed to jointly propose a penalty of $125 million for this misconduct, which has been widely reported by national business media.
Three Other Cases of Retail Banking Misconduct
There were also three retail banking misconduct matters, which were not previously known publicly:
1. The bank failed to respond to hundreds of customer hardship notices, in some instances for more than two years. The bank also lacked proper processes for dealing with such notices.
2. ANZ made false and misleading statements regarding its savings interest rates, leading to the bank’s failure in paying the promised interest rates to tens of thousands of its customers.
3. The bank failed to refund fees charged to thousands of deceased customers and did not respond to their loved ones within the required timeframe while dealing with the deceased estates.
For these three misconduct cases, ANZ is proposing penalties of $115 million in total.
ANZ’s Actions Towards Rectification
As part of its efforts towards rectification, ANZ has offered to pay the Australian Office of Financial Management (AOFM) the revenue it earned as the duration manager in connection with the issuance of a 10-year Treasury bond in October 2023. The bank is also planning to invest approximately $150 million in its Root Cause Remediation Plan, which is required by the Australian Prudential Regulation Authority (APRA) under a Court Enforceable Undertaking agreed upon earlier this year. This investment will be funded by de-prioritising other initiatives, as per the bank’s statement.
External Oversight
ANZ has engaged Promontory to provide independent assurance on the progress of the Root Cause Remediation Plan and to review the adequacy of an ASIC Matters Resolution Program within the retail bank.
ANZ’s Past Misconducts
ASIC also reminded the public of ANZ’s seven prior misconduct incidents from 2017 to 2023, which resulted in combined penalties of $76 million. These included breaches of continuous disclosure laws, four breaches of the Credit Act, and multiple contraventions of the Corporations Act and the ASIC Act.
These instances raise questions about how many misconducts it will take before the Australian Financial Services Licence and the Australian Credit Licence of a bank becomes seriously at risk. A review of this magnitude and the proposed penalty highlights the need for stronger oversight and regulation of the banking industry to safeguard consumers’ interests.
Source: Here
