ANZ fined $15m for misleading credit card customers over incorrect 'available funds'

ANZ fined $15m for misleading credit card customers over incorrect 'available funds'

Australia's fourth-largest banking group has copped a $15 million fine after admitting it misled customers on some credit card accounts about the funds they had available to withdraw without incurring fees and interest.

The Federal Court found ANZ breached the Australian Securities and Investments Commission (ASIC) Act and the National Consumer Credit Protection Act when it showed customers incorrect 'Available Funds' figures, which were inflated because the bank had not yet cleared deposits.

Customers who obtained a cash advance based on these available funds were hit with fees and interest.

In addition to the $15 million fine, ANZ has paid more than $8.3 million to approximately 186,000 accounts that were charged cash advance fees and interest between May 2016 to November 2018. Another remediation program will be set up for ANZ customers affected by this practice after that date until September 2021.

"Customers deserve clear and accurate information about available funds in their accounts and what fees and charges may be applied," says ASIC Deputy Chair Sarah Court.

"Many ANZ customers relied on the account information displayed by the bank and were charged fees that were inconsistent with that information."

The court also found ANZ did not act efficiently, honestly and fairly by failing to take timely action to address the problem.

"These are errors that we expect a bank to be aware of and fix in a timely manner. It should not have taken ANZ several years to address this issue," says Sarah Court.

"ASIC will continue to take action against banks who fail in their duty to act efficiently, honestly and fairly in dealings with customers."

The news comes within a week of National Australia Bank (ASX: NAB) being ordered to pay a $2.1 million penalty for unconscionable conduct by continuing to charge periodic payment fees even when the bank knew it was wrongfully overcharging customers between January 2017 and July 2018.

NAB  charged periodic payment fees on 74,593 occasions totalling $139,845 to 2,888 personal banking customers and 513 business banking customers.

Justice Derrington found NAB ‘unjustifiably advanced its self interest whilst knowing that its customers were oblivious to the wrongful charging that was taking place;.

"It deliberately and cynically took advantage of its customers’ unawareness, and was prepared to allow the overcharging to continue whilst it searched, admittedly in good faith, but without any great diligence, for a solution," Justice Derrington said.

"Such moral dereliction would seem to reflect an inherent sense of entitlement, possibly precipitated by a view that no real harm would come to the bank even if its conduct was detected. 

"It is, perhaps, also a product of a corporate culture that places a low priority on the observance of the law and on respect for its customers’ legal rights."

In addition to the $2.1 million penalty, NAB has paid approximately $9 million in remediation to affected customers who incurred incorrect periodic payment fees from 1 August 2001.

Justice Derrington also ordered NAB to publish an adverse publicity notice on its website and pay ASIC’s costs.

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