ANZ hit with record $250m fine for 'widespread misconduct'
- ANZ has been ordered to pay $10 million more than its record $240 million fine for misconduct
- The Federal Court boosted the fine agreed to by the corporate regulator ASIC and ANZ in September
- The court said the increased penalty was appropriate for the bank's "widespread misconduct"
The Federal Court boosted the fine the corporate regulator and ANZ agreed to in September.
It followed ASIC investigations into ANZ's "widespread misconduct and systemic risk failures" which included:
- paying incorrect interest to thousands of savings accounts customers
- failing to refund fees to customers who had died
- failing to respond to hundreds of customer hardship notices, some for more than two years
- misreporting data around the sale of $14 billion in government bonds
On Friday, Federal Court Justice Jonathan Beach determined the record $240 million fine was insufficient and upped it to $250 million.
In his judgement on the retail banking matters before the court, he reiterated the "serious and unacceptable nature of the contraventions" and said penalties were "not to be regarded as a cost of doing business".
As part of its penalty, ANZ was ordered to pay $35 million for its misconduct relating to deceased estates which included failing to refund fees charged to thousands of dead customers and not responding to families trying to deal with their estates within the required timeframe.
Justice Beach told the court:
"[The fine] puts a price on the contraventions that is appropriate to deter both repetition by ANZ and contravention by other licensees."
At an earlier hearing of the matter, he said he couldn't say whether the agreed $35 million fine was appropriate as he needed more information on whether the bank had resolved the issue.
He has now ruled the penalties for retail breaches were appropriate.
ANZ executives not off the hook
Friday's court ruling comes a day after the annual general meeting of ANZ shareholders where investors called for more serious consequences for those who oversaw the compliance failures.
Last month, former CEO Shayne Elliott and other executives were docked a total of $32 million in bonuses.
Mr Elliott has since launched legal action against the bank in retaliation.
But at the AGM on Thursday, many investors made it clear the bank did not go far enough.
ANZ chastised
Following Friday's ruling, ASIC chair Joe Longo took aim at Australia's fourth-largest bank.
"ANZ is a critical part of Australia's banking 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."
The largest slice of the fine - $135 million - was for the misreporting of data related to the sale of $14 billion in government bonds.
ASIC found ANZ exposed the Australian government to a significant risk of harm and denied it "an opportunity to protect itself and the public interest".
The regulator said the bank had overstated bond trading volumes by billions of dollars for almost two years, costing the government around $26 million.
It said tens of thousands of its retail customers also suffered from "systemic failures" across ANZ's banking operations.
"This outcome sends a clear message to ANZ that it needs to do better by its customers and to all banks that the cost of breaking the law is not an acceptable cost of doing business," ASIC said.
ANZ has released a statement to the Australian Stock Exchange in response to the ruling.
"ANZ is focused on significantly improving its management of non-financial risks across the bank, with a dedicated program of work underway as part of its Root Cause Remediation Plan," it said.
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