The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is edging lower on Thursday after being hit with a $25 million penalty.
In early trade, the banking giant's shares are down 0.1% to $27.63.
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What's happening?
This morning ANZ acknowledged that the Australian Securities and Investments Commission (ASIC) has commenced a civil penalty proceeding. This relates to benefits including fee waivers and discounts not being applied under the bank's Breakfree package, as well as system errors impacting offset account calculations.
The release notes that the proceeding primarily relates to issues raised during an ANZ case study at the 2018 Royal Commission.
What is ASIC alleging?
ASIC is alleging contraventions of certain misleading or deceptive conduct provisions of the ASIC Act and breaches of the general obligations owed by financial services licensees.
These include not all applicable benefits being applied under the Breakfree package, including home loan, transaction account and credit card fee waivers, home loan interest rate discounts, and optional additional benefits such as discounts on insurance premiums.
In respect to system errors, it is alleged that they were affecting the calculation of offset benefits in certain circumstances, including where customers made payments into their offset accounts on weekends or non-business days.
ANZ advised that it has enhanced its systems and processes to address these issues and is also undertaking remediation programs. Furthermore, the majority of payments to customers impacted are complete, with remaining payments expected to be made in 2022 and remediation for the optional additional benefits being completed over 2022-2023.
ANZ agrees to $25 million penalty
The release also explains that ANZ and ASIC have filed a statement of agreed facts and admissions with the Court.
This has seen ANZ admit to the contraventions and apologise to its customers who have been impacted. It also acknowledges that its conduct fell short of expectations and has co-operated fully with ASIC during its investigation.
The banking giant does not intend to contest the proceeding and will join ASIC in submitting a proposed penalty of $25 million to the Court. Positively, this remediation and the proposed penalty are covered by existing provisions.
