The corporate regulator Australian Securities and Investments Commission has started civil legal action against Australia and New Zealand Banking GrpLtd (ASX: ANZ).
ANZ shares will be carefully monitored Monday morning after the corporate regulator alleged the bank misled around 165,750 customers about their available funds and balances on their credit cards.
The bank then allegedly charged fees and interest based on the incorrect information.
For those customers, the false representations allegedly occurred for more than two years — between May 2016 and November 2018.
ASIC deputy chair Sarah Court claimed the practice is still happening.
"This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues," she said.
"We say that ANZ has been aware of the unlawful charging since at least 2018."
ANZ acknowledged the legal action in a message to the ASX.
"ANZ is considering the matters raised by ASIC in its concise statement," the bank stated.
"ANZ will not be providing further comment, given the matter is now before the court."
Some customers 'charged thousands of dollars in fees'
By allegedly overstating the funds available, customers spent money according to that information then ANZ was able to slug them fees and interest.
"In some cases, single customers were charged thousands of dollars in fees," she said.
"The average cash advance fees and interest charged per affected account was $47."
The false balances were allegedly shown on the ANZ website, app, and at ATMs.
Although ANZ has given back more than $10 million to customers affected until 17 November 2018, ASIC alleges current clients continue to be misled.
The corporate watchdog is asking the Federal Court to apply declarations and monetary penalties on the bank.
The court has yet to schedule the date for the first case management hearing.
The ANZ share price is down 8.3% for the year so far. The last month has been especially tough for its investors, as the bank's stock plummeted almost 6%.
According to The Motley Fool's Bernd Struben, ANZ shares trade at the lowest price-to-earnings ratio out of the big four banks.
