The corporate watchdog has today commenced legal proceedings against ANZ (ASX: ANZ), alleging the big four bank misled customers as to the available funds and balances in their credit card accounts and subsequently charged fees and interest as a result.
The Australian Securities and Investment Commission (ASIC) alleges that between May 2016 and November 2018, 165,750 ANZ customers were charged cash advance fees and interest for withdrawing or transferring money from their credit card accounts based on an incorrect account balance.
This incorrect balance was allegedly displayed to users once logged into the ANZ website, app and at ATMs. ASIC further alleges that the bank has not adequately fixed the problem and that some customers continue to be affected.
ASIC deputy chair Sarah Court said the regulator was concerned that ANZ overstated the available funds and balances on credit card accounts to some customers, and despite that still charged fees and interest to those customers who relied on that information when making withdrawals.
“In some cases, single customers were charged thousands of dollars in fees while the average cash advance fees and interest charged per affected account was $47,” Court said.
“This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues.
“We say that ANZ has been aware of the unlawful charging since at least 2018 and the problem is still occurring today.”
Specifically, ASIC’s allegations are that between May 2016 and September 2021 ANZ made false or misleading representations that where a ‘Current Balance’ and ‘Available Funds’ were in credit, the current balance would be available to the customer for withdrawal without incurring fees or interest.
Further, the watchdog claims that since 24 September 2021, ANZ engaged in conduct that was misleading or deceptive by representing that where the amount of a customer’s ‘Balance’ or ‘Funds’ was in credit, the balance would be available for withdrawal without incurring fees.
Finally, ASIC claims ANZ failed to do all things necessary to ensure the credit activities authorised by its Australian Credit Licence are engaged in efficiently, honestly and fairly.
ASIC acknowledged that ANZ has remediated more than $10 million to affected customers, but claims the problem is ongoing and is seeking orders from the court that customers who have been wrongly charged since 2018 also be remediated.
As of the end of October 2021, ANZ had remediated 220,761 credit card accounts which were wrongly charged fees or interest in the period 1 July 2015 to 17 November 2018.
The watchdog is also hoping to get declarations and pecuniary penalties from the Court, as well as orders that will force ANZ to implement a system change so that where a payment is made to a customer’s credit card account, it is not included in their funds or balance until that amount is cleared by the bank and available to use without “adverse consequences”.
This latest legal action by ASIC follows the watchdog’s success in court against ANZ in May, where the Federal Court determined former subsidiary RI Advice breached its licence obligations by failing to have adequate systems in place to manage cybersecurity risks.
Shares in ANZ are up 0.12 per cent to $25.71 per share at 10.49am AEST.
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