ANZ Bank
New Zealand will pay $3.25 million to settle charges it misled customers about
fees and wrongly demanded repayment of mortgage incentives, the
country’s Financial Markets Authority (FMA) announced today (Monday).
ANZ Pays $3.25 Million
After Admitting to Customer Overcharges
The bank
admitted to two separate breaches of fair dealing laws in an enforceable
undertaking with regulators. The settlement covers conduct
spanning more than a decade, affecting hundreds of thousands of customers.
ANZ charged
customers improper fees when their accounts went into unarranged overdraft
between December 2012 and May 2023. The bank collected both overdraft fees and
excess interest even when payments were ultimately rejected – a practice
that violated its own terms and conditions.
“ANZ’s
terms and conditions only allowed either the unarranged overdraft fee to be
charged, or the payment to be dishonored,” FMA Head of Enforcement
Margot Gatland said in a statement.
It is worth noting that the same bank paid a $15 million fine for the very same case two years ago in neighboring Australia, when the matter was handled by the local ASIC.
Overdraft Fees Hit
200,000+ Customers
Since fair
dealing laws took effect in April 2014, the improper overdraft charges affected
209,960 ANZ customers. The bank collected $4.37 million in improper fees: $3.49 million in overdraft charges and $879,078 in excess interest.
ANZ has
already paid back affected customers, including $1.02 million in “use of
money” payments that compensate for the time customers went without
their funds. The bank contacted current customers directly and made
“reasonable attempts” to reach former customers who could claim
refunds.
The second
violation involved ANZ’s handling of cash contributions it paid customers
who took out new home loans. These incentive payments came with
strings attached – customers had to keep their banking with ANZ for two
to three years or face demands to repay the money.
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False Claims About
Mortgage Incentives
When
customers moved to discharge their mortgages within the required timeframe, ANZ
assumed they were switching banks and demanded repayment of the cash
contributions. But the bank later discovered it couldn’t verify that 1,019
customers had actually violated their agreements by moving their business
elsewhere.
“By
requesting these customers to repay the cash contribution on the basis
that they had moved their banking to a competitor ANZ breached” fair
dealing laws, Gatland said. The false representations occurred between
August 2014 and August 2022.
ANZ
refunded $2.43 million in cash contributions to those 1,019 customers,
plus $582,030 in use of money payments.
The bank
has since changed how it handles mortgage discharges, requiring customers
to explain their reasons and clarifying when repayment of incentives is
actually required.
FinanceMagnates.com also recently reported on overcharging at Deutsche Bank, for which Hong Kong’s securities regulator fined the banking giant $24 million after uncovering $39 million in excessive fees over an eight-year period.
Self-Reported Violations
Lead to Settlement
ANZ
discovered and reported both issues to regulators itself, earning
acknowledgment from the FMA for its cooperation during the investigation.
The $3.25 million payment breaks down as $2.08 million for the overdraft fee
violations and $1.17 million for the mortgage incentive breaches.
“Banks
are required to ensure representations they make to customers about
overdraft fees and cash contributions are not misleading and do not
cause harm to customers,” Gatland said. “ANZ made false
representations in both instances.”
The
settlement includes a commitment from ANZ to develop better policies and
systems to prevent similar problems. The bank must also identify any
additional customers harmed by the mortgage incentive issue and provide
refunds.
“It is
essential that customers can continue to have confidence in their bank,”
Gatland said. “We will continue to respond to misleading practices to help
ensure New Zealand has fair, efficient and transparent financial
markets.”
This article was written by Damian Chmiel at www.financemagnates.com.
