The Australia New Zealand Banking Group Ltd (ASX: ANZ) share price is slipping into the red on Wednesday. ANZ shares are now trading at $27.39.
The bank’s shares are on the down amid news it is facing a multimillion-dollar class-action lawsuit in New Zealand. For context, though, ANZ is not the only bank share struggling, with all the big four banks losing ground today. The wider market is also having a pretty rough day, with the S&P/ASX 200 Index (ASX: XJO) down more than 1% at the time of writing.
Here’s what we know.
Why is ANZ in the naughty corner?
The lawsuit has been brought against the bank in the Auckland High Court on claims that it failed to refund fees and earned interest. The claim has been brought on behalf of 150,000 of its customers.
Litigators are seeking compensation from the bank. They claim ANZ has yet to make good on these owed payments, some of which came about due to disclosure breaches.
Australian litigation finance firm CASL and New Zealand litigation financier LPF Group are jointly funding the suit.
It’s not the first time ANZ has admitted a liability of this nature. It has previously acknowledged failures to provide accurate information to personal and home loan customers in New Zealand.
Last year the bank agreed to pay around NZ$30 million to some 100,000 of its customers. This was after admitting it misstated interest calculations on loans from May 2015 to May 2016.
According to ANZ, this was due to a coding error in its mortgage payment algorithms.
The present case is to be prosecuted under the Credit Contracts and Consumer Finance Act (CCCFA) of New Zealand. Former NZ Commerce Commission lawyer Scott Russell will lead the bench.
Speaking to today’s NZ Herald, Russell said, “If a bank fails to comply with its disclosure obligations, it is not legally entitled to charge interest or fees on the affected loan” until issues are rectified.
Russell added that ANZ’s alleged failures “constitute serious breaches of the provisions of the CCCFA”. He asserted the bank should pay its customers back to set the record straight.
ANZ shares are down 0.85% on the day, in line with weakness in the broader Australian financials sector.
ANZ share price snapshot
The ANZ share price has climbed over 20% this year to date, extending its gains over the past year to 56%.
Yet, it is down 3% in the past month.
Nonetheless, ANZ shares have outpaced the S&P/ASX 200 Index (ASX: XJO) benchmark return of 20% this past 12 months.