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ASIC to pay A$10 million over periodic payment fees

Chris Hamblin, Editor, London, 14 October 2020

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The Federal Court of Australia has ordered Australia and New Zealand Banking Group to pay A$10 million in penalties after finding that it had engaged in unconscionable conduct and breached its obligations as a financial services licensee.

Between August 2003 and September 2015, ANZ charged certain fees to customers - individuals and businesses alike - in relation to periodic payments. These were fees that it charged for periodic payments that could not be made due to insufficient funds in the customers' accounts (non-payment fees) and transaction fees that it charged for successful periodic payments.

Under the relevant terms and conditions, ANZ was not entitled to charge non-payment fees or transaction fees to customers in any situation where a periodic payment was made between two accounts held in the same customer name (same-name fees).

ANZ admitted that after 11 July 2011, as a result of receiving communications from its external lawyers, it knew that there was a risk that it was not contractually entitled to charge same-name fees to non-loan retail and commercial customers. Despite knowing this risk, prior to December 2013, ANZ did not determine whether it was entitled to charge the same-name fees but continued to charge them regardless until September 2015.

ASIC says that it engaged in such "unconscionable conduct" on 327,895 occasions, in contravention of s12CB Australian Securities and Investments Commission Act 2001. It breached its general obligation to comply with the financial services laws, in contravention of s912A(1)(c) the Corporations Act 2001 and failed to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly, in contravention of s912A(1)(a) of the Corporations Act.

ANZ also admitted to not having made various remediation payments. It has to pay $1 million towards ASIC’s court costs. Its charging conduct affected approximately 69,000 customers. The total value of fees that ANZ charged these customers without contractual entitlement was approximately A$3.1 million. Remediation payments so far come to about A$2.5 million.

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