Australia and New Zealand Banking Group Limited (ANZ) has admitted to engaging in unconscionable conduct in services it provided to the Australian Government, incorrectly reporting its bond trading data to the Australian Government by overstating the volumes by tens of billions of dollars and to widespread misconduct across products and services impacting nearly 65,000 customers.
ASIC and ANZ will ask the Federal Court to impose penalties of $240 million in relation to four separate proceedings spanning misconduct across ANZ's Institutional and Retail divisions.
The misconduct occurred over many years and was marked by ANZ's significant failure to manage non-financial risk across the bank.
The four matters ASIC has filed against ANZ concern:
- Acting unconscionably in its dealings with the Australian Government whilst managing a $14 billion bond deal and incorrectly reported its bond trading data to the Australian Government by overstating the volumes by tens of billions of dollars over almost two years,
- Failing to respond to hundreds of customer hardship notices, in some cases for over two years, and failing to have proper hardship processes in place,
- Making false and misleading statements about its savings interest rates and failing to pay the promised interest rate to tens of thousands of customers, and
- Failing to refund fees charged to thousands of dead customers and not responding to loved ones trying to deal with deceased estates within the required timeframe.
The penalties subject to consideration and approval by the Federal Court include $125 million for the institutional and markets matters, including a record $80 million penalty for unconscionable conduct, and $115 million in total penalties for the three retail matters.
ASIC Chair Joe Longo said, 'Time and time again ANZ betrayed the trust of Australians.
'The total penalties across these matters are the largest announced by ASIC against one entity and reflect the seriousness and number of breaches of law, the vulnerable position that ANZ put its customers in and the repeated failures to rectify crucial issues.
'Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system.
'There are fundamental issues with ANZ's risk and compliance culture that require the Board's and executives' urgent attention.
'In the bond trading case, ANZ was in a trusted position and its conduct had the potential to reduce the amount of funding available to the government. This funding is used to support critical services including Australia's health and education systems, affecting all Australians.
'When public funds are put at risk, every Australian pays the price.' the Chair said.
ASIC Deputy Chair Sarah Court said, 'The issues we have seen reflect serious inadequacies across multiple levels and multiple divisions of ANZ and a clear failure to manage non-financial risk.
'As one of Australia's biggest banks, customers trusted ANZ to do the right thing but, even on the basics like paying the correct interest rate, it fell short.
'If these penalties are imposed by the court, it will be a clear message to ANZ and all other banks that the cost of breaking the law is not an acceptable cost of doing business.'
Including today's announcement, ASIC has now brought eleven civil penalty proceedings against ANZ since 2016 with proposed and ordered penalties totalling more than $310 million.
'ANZ needs to prioritise the management of non-financial risk so it can step up and do better by its customers,' the Deputy Chair said.
ANZ has admitted the allegations in each of the proceedings.
It is a matter for the Court to determine whether the penalties are appropriate and to make other orders.
Each matter will now be separately considered and determined by the Federal Court.
Background
The four matters filed against ANZ concern:
Unconscionable conduct when managing a $14 billion government bond deal and inaccurate reporting of secondary market bond turnover
On 19 April 2023, ANZ was assisting the Government's sovereign debt management agency, the Australian Office of Financial Management (AOFM), to help deliver a $14 billion bond issuance.
Instead of trading gradually throughout the day to limit market impact, ANZ sold a significant volume of 10-year Australian bond futures around the time of pricing which placed undue downward price pressure on the bond price. ANZ knew its trading could expose its client to significant risk of harm, but did not disclose to its client that ANZ still had significant volumes to sell before pricing nor provide its client an opportunity to consult with ANZ about delaying pricing. This denied the Government an opportunity to protect itself and the public interest. The Government was relying on ANZ's expertise and professionalism. When the Government later asked what happened, ANZ's reports were misleading or deceptive.
The bond deal was raising money to finance government spending for the benefit of all Australians. This is one way the Australian Government funds critical government services, such as health, social welfare, education, infrastructure and defence.
ASIC also alleges ANZ misled the Government about its trading turnover for nearly two years. This data, among other factors, helps the Government select dealers for bond issuances. ANZ's inflated figures made it appear more active than it was and occurred despite internal concerns about the accuracy of the data and awareness that the figures could influence future appointments on bond issuances.
ANZ has admitted to acting unconscionably and misleading the Government. It also admitted to failing to meet its obligations as an Australian financial services licensee. It has agreed to pay a combined penalty of $125 million.
Financial Hardship
ASIC alleges that ANZ failed to respond to 488 customers who submitted financial hardship notices to the bank between May 2022 and September 2024. In some cases, ANZ took more than two years to respond to customers. Personal circumstances reported by customers when providing hardship notices to the bank included unemployment, serious medical issues, bereavement and family violence. In some cases, ANZ took action to recover debts from customers even when they had not responded to the customers' hardship notices, including issuing default and demand notices, and referring customers to external debt collection agencies. ASIC first notified ANZ of issues with its financial hardship processes in June 2023, however, steps taken by ANZ to fix the issues did not work consistently, resulting in some further failures by ANZ up to September 2024. ANZ has completed a remediation program for affected customers, which has included customer payments totalling $92,687 and corrections to customer credit reports.
Bonus interest
Between July 2013 and January 2024, ANZ promoted offers on its website to pay introductory bonus interest to customers who opened certain new accounts. However, due to process deficiencies in ANZ's systems, ASIC alleges the bonus interest was not always applied. ANZ remediated 194,487 accounts (7.26% of these accounts opened during the period) as a result of the issue and adopted higher interest rates when in doubt and remediating secondary impacts and the time value of money. Separately, between August 2024 and March 2025, ANZ promoted on its website base variable and bonus fixed introductory interest rates for certain accounts which ASIC alleges were inaccurate. The issue impacted 56,703 customers (46.4% of accounts opened during this period), resulting in ANZ failing to pay the correct amount of interest promised to 26,917 customers, with around $480,000 in interest not paid out. ANZ intends to remediate these customers.
Deceased Estates
Between July 2019 and June 2023, ANZ failed to refund fees charged to thousands of deceased customers. This is because its systems and processes could not identify which fees should be waived and/or refunded and whether any fees charged after a customer's death had been waived or refunded. ANZ did not respond to representatives of deceased estates in the required timeframe after notification of the customer's death. ANZ has been unable to identify the total number of affected customers so the full extent of the impact is still unknown. ANZ's failures are likely to have compounded the difficulties faced by loved ones dealing with the death of a family member or relative, as well as frustrating the probate process. ANZ first identified the systems, controls and processes issue in 2022, and took over a year to resolve it. In response in July 2024, ANZ was sanctioned for breaches of the Banking Code of Practice by the Banking Code Compliance Committee. Over 18,900 customer accounts were remediated $3.8m by ANZ for fees it did not intend to charge and additional costs arising from delays, with over 9,000 people also contacted to apologise for delays they experienced.
Prior misconduct by ANZ across seven matters of concern includes:
- In 2023, ANZ was ordered to pay a $900,000 penalty for breaching continuous disclosure laws when undertaking a $2.5 billion institutional share placement in 2015 (23-332MR) in circumstances where the maximum penalty applicable at the time was $1 million.
- In 2023, ANZ was ordered to pay a $10 million penalty for contravening the Credit Act by accepting information and documents from unlicensed third parties in its home loan introducer program (23-059MR).
- In 2023, ANZ was ordered to pay a $15 million penalty for breaching the Credit Act and the ASIC Act for misleading customers about their available funds for certain credit card accounts, resulting in fees and interest charges (23-260MR).
- In 2022, ANZ was ordered to pay a $25 million penalty for 155,868 contraventions of the ASIC Act, Corporations Act and Credit Act for failing to provide promised benefits to customers with offset transaction accounts or under a 'Breakfree' package over 20 years (22-290MR).
- In 2020, ANZ was ordered to pay a $10 million penalty for breaching the Corporations Act and the ASIC Act in relation to 327,898 instances of unconscionable conduct over periodic payment fees charged to customers until September 2015 (20-232MR)
- In 2018, ANZ was ordered to pay a $5 million penalty for breaching responsible lending provisions in the Credit Act for failing to verify customer income in its former Esanda car finance business (18-057MR).
- In 2017, ANZ was ordered to pay a $10 million penalty for contraventions of the Corporations Act and the ASIC Act for attempting to manipulate the bank bill swap reference rate (BBSW) on ten occasions over an 18-month period (17-393MR).
