The Federal Court has ordered Australia and New Zealand Banking Group (ASX:ANZ) to pay A$250 million in combined penalties after finding widespread misconduct across its institutional and retail banking operations, marking the largest penalty outcome ever secured by the Australian Securities and Investments Commission.
The decision follows four civil proceedings brought by the corporate regulator, which alleged systemic failures ranging from market misconduct in a government bond deal to prolonged mishandling of customer hardship cases, misleading savings disclosures and failures in dealing with deceased estates.
ASIC chair Joe Longo said the penalties reflected both the breadth of ANZ’s failures.
“ANZ is a critical part of Australia’s financial system and, frankly, they must do better,” he said. “The size of the penalties ordered today underscores the seriousness of ANZ’s misconduct and its far-reaching consequences for the government, taxpayers and tens of thousands of customers.”
Market and institutional misconduct
The largest component of the penalty — A$135 million — relates to ANZ’s institutional and markets business.
That includes an A$80 million penalty for unconscionable conduct in connection with a A$14 billion Australian government bond issuance in 2020, where the court found ANZ misled the Australian Office of Financial Management (AOFM) about investor demand and allocation outcomes.
A further A$50 million was imposed for inaccurate reporting of secondary bond market turnover data to the AOFM over a five-year period, conduct the court said deprived the government of the opportunity to assess and protect its interests.
Justice Jonathan Beach described the conduct as “inexcusable” and lacking any “redeeming feature whatsover”, noting that accurate reporting was fundamental to market integrity.
Retail banking failures
The remaining penalties relate to a series of retail banking failures affecting tens of thousands of customers.
ANZ was fined A$40 million for failing to appropriately respond to hundreds of customer hardship notices, with some cases left unresolved for more than two years. ASIC said the bank’s systems and processes were inadequate to meet basic legal obligations.
Another A$40 million penalty was imposed for making false or misleading statements about savings interest rates and failing to pay customers the rates they were promised.
ANZ was also ordered to pay A$35 million for charging fees to deceased customers and failing to respond to estate representatives within required timeframes.
ASIC deputy chair Sarah Court said the misconduct extended to “fundamental banking basics”, including paying promised interest and treating vulnerable customers appropriately.
ANZ response
In a Friday statement in response to the decision, ANZ said the court’s orders reflect its earlier settlement with ASIC and that the penalty is largely covered by existing provisions.
“ANZ is focused on significantly improving its management of non-financial risks across the bank, with a dedicated program of work under way as part of its Root Cause Remediation Plan,” it said.
ANZ added that it has established dedicated programs to meet its commitments, which will be reviewed by an independent expert.