New Zealand’s largest bank has admitted to making misleading statements to customers in two separate cases, resulting in more than $4 million in overcharges affecting hundreds of thousands of customers.
The Financial Markets Authority (FMA) announced yesterday that ANZ Bank has agreed to pay $3.25 million to the Crown in lieu of a pecuniary penalty after admitting to breaching fair dealing laws under the Financial Markets Conduct Act.
The first breach involved wrongly applying fees and interest to customers’ accounts for unarranged overdrafts between Dec. 20, 2012 and May 31, 2023.
FMA head of enforcement Margot Gatland said when some customers went into unarranged overdraft, ANZ charged both an unarranged overdraft fee and excess interest, even when payments were ultimately dishonoured by the bank.
“However, ANZ’s terms and conditions only allowed either the unarranged overdraft fee to be charged, or the payment to be dishonoured,” FMA stated.
Since the FMCA came into force in April 2014, 209,960 ANZ customers were affected by the issue. The total value of overcharges was $4,373,972, comprising $3,494,894 in fees and $879,078 in excess interest.
ANZ has made remediation payments to all impacted customers who remain with the bank and has made reasonable attempts to contact former customers, FMA noted. The bank also paid “use of money” amounts totalling $1,019,459.
The second breach involved ANZ wrongly reclaiming mortgage incentive payments from 1,019 customers.
The bank provided cash contributions to customers who obtained new home loans, conditional on keeping their banking with ANZ for two to three years. ANZ sought repayment when customers discharged their mortgages early, assuming they were moving banking to competitors.
“However, in some instances ANZ has since not been able to verify that the customer breached the agreement to keep its banking with ANZ,” FMA said.
FMA said by requesting repayment on the assumption customers had breached agreements, ANZ made false representations of its right to require payment.
According to 1News, an ANZ spokesperson said the bank accepted the FMA’s findings. “We remain committed to doing the right thing by our customers and continuously improving how we operate,” the spokesperson said.
Under the Enforceable Undertaking, ANZ agreed to pay $2.08 million for the overdraft fee representations and $1.17 million for the cash contribution representations.
Gatland said banks must ensure representations about overdraft fees and cash contributions are not misleading and do not harm customers.
“It is essential that customers can continue to have confidence in their bank,” Gatland said. “We will continue to respond to misleading practices to help ensure New Zealand has fair, efficient, and transparent financial markets.”
The FMA acknowledged ANZ’s cooperation throughout its investigation. ANZ self-reported both breaches to the regulator.
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