Financial institution ANZ to shell out $160 million as penalty for consumer violations, related to a bond deal.
ANZ Settles Major Investigations, Agrees to Pay Record Penalty in Australia
In a significant development, the ANZ Group has reached a settlement in five separate investigations across its Australian Markets and Retail divisions. The settlement comes with a hefty price tag, as ANZ has agreed to pay A$240 million in penalties, marking the largest ever by a single entity in Australia.
The penalties are primarily due to systemic failures, including charging fees to thousands of dead customers for four years up to June 2023, and acting "unconscionably" in a government bond deal. ANZ has also offered to repay the A$10 million it would have earned for its role in the government bond deal.
Central to the violations was ANZ's conduct during a A$14 billion government bond issuance on April 19, 2023. The bank's trading behavior pushed bond futures pricing down 2 basis points, which cost the government about A$26 million.
In addition, between July 2013 and January 2024, ANZ failed to pay promised bonus interest to new account holders due to system deficiencies. The bank has not engaged in a government deal since the transaction more than two years ago.
ANZ has admitted allegations in each case, according to the Australian Securities and Investments Commission (ASIC). Since 2016, ASIC has brought 11 civil penalty proceedings against ANZ, with total penalties exceeding A$310 million.
The bank, Australia's fourth-largest, announced 3,500 job cuts last week as part of efforts to improve profitability. The new CEO of ANZ Group, Nuno Matos, who has been working since last week to improve profitability, has not yet been informed about a claim lodged by the Finance Sector Union regarding the job cuts.
As part of the settlement, ANZ plans to submit a remediation plan to the Australian Prudential Regulation Authority by the end of this month. The bank expects to spend A$150 million implementing reforms in the financial year ending September 30, 2026.
Some current and former staff in ANZ's markets trading business have had significant impacts on their variable pay components due to the trading behavior. The bank has carried out 50 accountability reviews on employees in its markets trading business.
The trading behavior occurred instead of trading gradually to limit market impact, a practice that is considered unacceptable in the financial industry. The union's claim against ANZ for the job cuts will be lodged with Australia's industrial tribunal.
This settlement marks a significant step for ANZ as it seeks to regain public trust and improve its financial standing. The bank has not yet commented on whether it has identified which fees should be waived or whether charges after death have been refunded.
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