Australia’s ANZ bank hit with record $205m fine over ‘widespread misconduct’

SYDNEY – Australia’s ANZ has agreed to pay a record fine of A$240 million (S$204.7 million) over “widespread misconduct”, the financial regulator said Sept 15.

The fine is the largest ever announced by the regulator against a single entity, the Australian Securities and Investments Commission (ASIC) said.

ANZ was fined for “acting unconscionably” while managing a A$14 billion bond deal with the Australian government.

It was also penalised for “failing to respond to hundreds of customer hardship notices”, making false or misleading statements about its savings interest rates and failing to refund fees charged to dead customers.

“Time and time again ANZ betrayed the trust of Australians,” Mr Joe Longo, chair of the ASIC, said.

“Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system.”

ASIC deputy chair Ms Sarah Court said: “As one of Australia’s biggest banks, customers trusted ANZ to do the right thing but, even on the basics like paying the correct interest rate, it fell short.”

ANZ chairman Mr Paul O’Sullivan confirmed that the bank had agreed to the fines, saying “the reality is we made mistakes that have had a significant impact on customers”.

“On behalf of ANZ, I apologise and assure our customers we have taken the necessary action, including holding relevant executives accountable,” he said in a statement.

The penalty marks a troubling milestone for ANZ, which last week announced 3,500 job cuts as new chief executive Mr Nuno Matos looks to improve profitability.

Including the latest announcement, ASIC has brought 11 civil penalty proceedings against ANZ since 2016, with total penalties exceeding A$310 million. ANZ has admitted allegations in each case, according to ASIC.

The latest settlement, requiring Federal Court approval, resolves five separate investigations across ANZ’s Australian Markets and Retail divisions. Central to the violations was ANZ’s conduct during a A$14 billion government bond issuance on April 19, 2023.

“In the bond trading case, ANZ was in a trusted position and its conduct had the potential to reduce the amount of funding available to the government. This funding is used to support critical services including Australia’s health and education systems, affecting all Australians,” Mr Longo said. “When public funds are put at risk, every Australian pays the price.”

Instead of trading gradually to limit market impact, ANZ sold significant volumes of 10-year Australian bond futures around pricing time, placing “undue downward pressure” on bond prices, ASIC said.

The regulator added ANZ misled the government about trading turnover data for nearly two years – information used to select dealers for bond issuances.

Beyond bond trading, the violations revealed widespread customer service failures. Between July 2013 and January 2024, ANZ failed to pay promised bonus interest to new account holders due to system deficiencies.

More egregiously, from July 2019 to June 2023, the bank continued charging fees to thousands of deceased customers, unable to identify which fees should be waived or whether charges after death had been refunded.

ANZ said it would submit its remediation plan to the Australian Prudential Regulation Authority by the end of this month, expecting to spend A$150 million implementing reforms in the financial year ending Sept 30, 2026.

The bank previously fired or suspended traders from its markets business over the inappropriate conduct allegations. AFP, REUTERS