ANZ fined $15m for misleading customers

Federal Court ANZ penalty fine
ANZ Group has been fined $15 million by Australia’s Federal Court after it admitted to misleading customers as to the funds available in certain credit card accounts they held, with the error found to be result of a core systems fault.

The Court previously found that ANZ breached the Australian Securities and Investments Commission (ASIC) Act and the National Consumer Credit Protection Act by falsely indicating that customers could obtain a cash advance from funds stated to be their ‘Available Funds’ without incurring fees and interest.

According to the Court, ANZ had not cleared deposits into the credit card accounts, meaning that the ‘Available Funds’ amount was incorrect and was displaying, on the customer’s screen, a larger amount than was available for withdrawal without incurring fees or interest.

Following this, customers who obtained a cash advance based on these available funds were hit with fees and interest.

ASIC deputy chair Sarah Court said: “Customers deserve clear and accurate information about available funds in their accounts and what fees and charges may be applied.

“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 failed to act “efficiently, honestly and fairly” by not taking timely action to address the problem.

In addition to the $15 million penalty, ANZ has been ordered to establish a remediation program to repay affected ANZ customers who were charged a cash advance fee between November 2018 and September 2021.

ASIC said that over 186,000 accounts had been remediated by ANZ for fees and interest charged on cash advances.

In some cases, single customers were charged thousands of dollars in fees while the average remediation paid was around $45 per affected account.

ASIC earlier found the errors were due to a discrepancy in reporting between backend core computer systems – the Core Transaction Management (CTM) system, which controlled the amounts displayed to consumer credit card customers on the key ANZ channels, and the Vision Plus system, which processed debits before credits.

The court noted that amounts displayed to ANZ consumer credit card customers on the key ANZ channels by the CTM system could include transactions that had not yet been processed by the Vision Plus system.

“When a customer made certain types of deposits to their credit card account, the CTM system immediately increased the amounts displayed on the key ANZ channels as the customer’s available funds and current balance by the amount of that deposit. At that time, such a deposit had not yet been processed by the Vision Plus system,” the Court wrote in its judegement.

“If a cash advance was then made from the account and the cash advance was processed by the Vision Plus system prior to the deposit, the amount of the deposit did not offset the amount of the cash advance in the calculation of any cash advance fee, and the customer.”