ANZ’s shambolic customer relations record touched a new low on Wednesday after the Federal Court imposed a A$25 million civil fine on the company for failing to pass on benefits owed to more than 689,000 borrowers who signed up for the company’s mortgage offset account and the derelict Breakfree loan package.
The penalty is one of the largest ever imposed on an Australian bank for breaches of Australian credit and company laws.
Justice David O’Callaghan found that the bank failed to deliver rate discounts and fee waivers to home loan borrowers for more than 20 years even though they paid at least $118 million in package fees to access such benefits.
The systemic and protracted foundering of ANZ’s customer management systems was highlighted by Justice O’Callaghan in his judgment.
“From the mid-1990s to 22 September 2020 (for offset customers) and March 2003 to 30 September 2021 (for Breakfree customers), ANZ failed to apply all applicable Breakfree benefits, Breakfree ancillary benefits or offset benefits to approximately 689,099 customer accounts in accordance with applicable terms and conditions,” the judge said.
“These failures meant that not all customers received the benefits to which they were entitled during the relevant period.”
ANZ’s Breakfree package - introduced in 2003 under former chief executive John McFarlane (now Westpac chairman) - was discontinued as a product offering last month.
The court found that ANZ denied Breakfree and offset account customers more than $159 million worth of benefits because the bank’s systems did not work properly.
“The contravening conduct was the result of ANZ’s failure over the relevant period to maintain systems and processes that were adequate to administer the benefits, and to conduct adequate monitoring or analysis of its systems and processes to identify instances of customers not receiving benefits,” Justice O’Callaghan said in his judgment.
“During the relevant period, ANZ attempted to correct identified deficiencies in its systems and processes, and while it did implement improvements, those did not identify and address all instances of customers not receiving benefits.”
Justice O’Callaghan also noted that there had been a significant delay in identifying impacted customers, and therefore remediating them.
“Although the nature of the acts or omissions comprising the contraventions was that of inadvertence, the conduct continued as long as it did because of inadequacies within ANZ’s systems, which were compounded by inaction or ineffective action,” he found.
In a media statement issued on Wednesday ANZ acknowledged that not all Breakfree customers affected by the protracted service failure had been remediated.
“ANZ has…completed the majority of payments to customers impacted by the Breakfree package issues relating to home loans, transaction accounts and credit cards, with remaining payments expected to be made in early 2023,” the bank said.
The bank also did not explicitly acknowledge in its media statement that it made admissions to the court of misleading customers and committing breaches of the Corporations Act and other laws.
“While the Court accepted that ANZ's conduct was not deliberate, and acknowledged ANZ's cooperation during the ASIC investigation, ANZ accepts that its conduct fell short of expectations and apologises to its customers who have