ANZ agrees to pay $3.25 million after overcharging customers millions in interest and fees

ANZ was found to have breached fair dealing laws on two occasions. Photo / Alex Burton

ANZ has agreed to pay $3.25 million after admitting it breached fair dealing laws which saw some customers overcharged millions of dollars in interest and wrongly applied fees.

The country’s largest bank self-reported two fair dealing breaches to the Financial Markets Authority (FMA), which were investigated and found to have been in breach of the Financial Markets Conduct Act (FMCA).

An ANZ spokesperson said the bank accepted the FMA’s findings and took its obligations seriously.

“We remain committed to doing the right thing by our customers and continuously improving how we operate,” the spokesperson said.

The first breach, which happened between December 20, 2012 and May 31, 2023, involved some customers who went into unarranged overdraft being charged an unarranged overdraft fee, and excess interest, in circumstances where the payment was ultimately dishonoured by ANZ.

More than 209,000 ANZ customers were affected by the issue, being overcharged a combined $4,373,972.

ANZ has made remediation payments to all impacted customers who are still currently ANZ customers.

The bank said it has made reasonable attempts to contact all former impacted customers and has paid all of those who have claimed payments.

ANZ’s second fair dealing breach of the FMCA involved claiming repayment of mortgage incentives previously given to customers when it should not have.

ANZ provided cash contributions to some customers when they obtained a new floating, fixed, flexible, or business home loan from the bank, as long as they kept their banking with ANZ for the next two to three years.

However, ANZ sought repayment from customers when they discharged their mortgage within that time, on an assumption that the customer was moving some of their banking to a competitor.

But in some instances, ANZ could not verify that the customer breached the agreement to keep its banking with ANZ.

The FMA said by requesting these customers to repay the cash contribution on the basis that they had moved their banking to a competitor, ANZ breached s 22(h) of the FMCA, in that they were false representations of ANZ’s right to require payment of the cash contribution.

ANZ has since remediated 1019 customers who fall within this category.

“Banks are required to ensure representations they make to customers about overdraft fees and cash contributions are not misleading and do not cause harm to customers,” said FMA’s head of enforcement Margot Gatland.

“ANZ made false representations in both instances.”

Gatland said it is essential that customers can continue to have confidence in their bank.

“We will continue to respond to misleading practices to help ensure New Zealand has fair, efficient and transparent financial markets.”

ANZ agreed to pay the $3.25m to the Crown, in lieu of a pecuniary penalty.