The Federal Court has imposed a $25 million penalty on Australia and New Zealand Bankng Grp Ltd (ASX: ANZ) for failing to provide promised benefits to customers.
The court found that, over a period spanning 20 years, the bank failed to provide 689,000 accounts features like fee waivers and interest rate discounts that they were eligible for.
The remediation for the breaches will total $211 million.
Australian Securities and Investments Commission deputy chair Sarah Court said having systems in place to make sure customers receive their entitlements is "not an optional extra, it is a requirement".
"ANZ is a large financial institution that for many years failed to prioritise and deploy the systems and processes necessary to fulfil its obligations," she said.
Customers paid for benefits never received
ANZ's violations involved customers of its Breakfree package, which was supposed to waive fees and reduce interest on products like home loans, credit cards, and transaction accounts in return for a single annual fee.
The breaches also involved customers with offset facilities on their home and business loans, which was meant to reduce their interest liabilities.
The civil case heard that these benefits were not always granted to the customer.
The bank was found to have contravened the ASIC, the corporations, and the national consumer credit protection acts. The court concluded ANZ misled customers when it told them it had "adequate systems and processes" to provide them the benefits.
ANZ acknowledged the penalty and apologised to affected customers.
"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," its statement read.
"ANZ has enhanced its systems and processes to address these issues and is undertaking remediation programs."
The Breakfree product was discontinued on 10 September this year.
The case was the final court filing from ASIC's enforcement investigations arising from the financial services Royal Commission. There are still seven more cases yet to be resolved.
Not intentional is not an excuse
Justice David O'Callaghan noted in his judgement that ANZ's breaches went on for a long time and affected a massive number of clients, leading to a huge dollar amount to be remediated.
"There was also a significant delay in identifying impacted customers, and therefore remediating them," he said.
"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."
The court also ordered ANZ to publish the details of the penalty on its website and online banking login page.
