ASIC to launch proceedings against ANZ

ASIC to launch proceedings against ANZ

ANZ is set to face civil penalty proceedings over fees charged to customers who failed to make scheduled payments between accounts.

The issue was part of an ultimately unsuccessful class action brought by law firm Maurice Blackburn, but in December 2018 there was a settlement of $1.5 million for certain fees.

The settlement is still subject to court approval, but the Sydney Morning Herald reports customers affected by the periodical payment non-payment (PPN) fees will likely get less than $100 each.

In an announcement today, ANZ said it had been advised that the Australian Investments and Securities Commission (ASIC) intended to take the matter to court over periodical payments in certain circumstances prior to February 2016.

In the afternoon, ASIC confirmed it was suing ANZ for "misrepresentations and unconscionable conduct" over account fees.

In the proceedings, ASIC will will allege ANZ was not entitled to charge certain periodic payment fees under its contracts with customers.

The corporate watchdog alleges transaction and non-payment fees were charged for periodical payments between accounts in the same name, and that between 2003 and 2016 the bank unlawfully charged fees on more than 1.3 million occasions.

Transaction fees for successful payments reportedly varied between $1-70-4 for business accounts and $0-4 for retail accounts, while non-payments were between $35-45 for business accounts and $6-45 for retail accounts. 

"ASIC contends that ANZ first became aware there was a risk the bank was not entitled to charge these fees in July 2011," the regulator says.

However, the watchdog notes ANZ did not provide written notification of the existence of a possible issue in relation to the fees to ASIC until 14 February 2014, and only started notifying affected customers on 23 September 2015.

ASIC claims it wasn't until 23 February 2016 that ANZ changed its terms and conditions to permit the charging of the fees, before it started to commence making remediation payments in relation to the unlawfully charged fees until August 2016.

"At the heart of ASIC's action is the fact that ANZ continued to charge the fees during the 2003-2016 Period, despite what ANZ already knew," ASIC says.

"The ASIC Act contraventions attract a maximum pecuniary penalty of between $1.7 million and $2.1 million per contravention.

The bank says it "categorically denies any deliberate wrongdoing and intends to vigorously defend any such allegation".

"Separately, ANZ has already provided for approximately $50 million in customer remediation payments for this matter of which more than $28 million has already been paid to customers impacted since 2008," the bank says.

"The Australian Government Solicitor has informed ANZ it will file documents in the Federal Court on 29 July."

In its announcement, ASIC acknowledges ANZ has paid the $28 million in remediation to customers to date.

"ASIC estimates that the total gross loss to customers during the period 1 January 2008 to 23 February 2016 is in excess of $50 million," ASIC says.

"ANZ has paid approximately $28 million in remediation to customers to date. However, ANZ has not paid remediation to customers who have been charged the fees prior to 31 December 2007."

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