‘Unconscionable’: major bank’s record fine bumped up
A court has slapped ANZ with an additional $10 million on top of its record fine for widespread abuse and systemic failures.
The historic fine follows an investigation by the corporate regulator, which found the big four banks ignored hundreds of customer distress reports, misrepresented and failed to pay savings rates and failed to refund fees charged to thousands of dead people’s accounts.
ANZ also mishandled a $14 billion bond deal on behalf of the federal government.
The new total of $250 million in fines across four matters is the largest fine levied by the Australian Securities and Investments Commission against a single entity.
On Friday, Federal Court Judge Jonathan Beach increased the penalty for misreporting secondary bond market turnover data by $10 million, bringing the total penalty for the issue to $50 million.
“ANZ did not act conscientiously, did not act transparently and did not trade as it said it would,” he said in his decision.
The issue of bond trading exposed the federal government to significant risks.
ANZ misled the Commonwealth for nearly two years by overstating bond trading volumes by billions of dollars, ASIC chairman Joe Longo said on Friday.
“ASIC estimates ANZ’s cost of commercial fraud could be up to $26 million, reducing funds that can support essential public services,” he said.
“ANZ is a critical part of the Australian banking system and frankly they need to do better.”
The corporate watchdog said the record fine underlined the seriousness of ANZ’s misconduct and the consequences for the government, taxpayers and tens of thousands of customers.
“ANZ must overhaul its non-financial risk management and put the interests of clients, customers and the public first,” Mr Longo said.
The extra $10 million fine comes a day after ANZ’s board decided not to pursue its new CEO and sacrifice some of its pay in the spirit of accountability after a difficult few months.
The board canceled the short-term variable incentive payments of several executives, including former CEO Shayne Elliott, due to the issue.
Mr Elliot, who lost $13.5 million in bonuses, recently hit back by suing in the NSW Supreme Court to recoup the money.
Nuno Matos, who replaced Mr Elliot in May, has volunteered not to take a short-term bonus for 2024/25, even though the problems at the bank predated his arrival.
At its annual general meeting on Thursday, shareholders launched an embarrassing “second strike” against ANZ over executive pay.
Nearly two-thirds of the votes were cast in favor of the executive compensation report, below the required 75 percent.
ANZ said almost all of the financial impact of the $250 million fine and legal costs would be covered by the existing provisions.
“ANZ is focused on significantly improving non-financial risk management across the bank,” he said in a statement on Friday.
Meanwhile, the board appointed independent legal counsel to investigate mismanagement in bond trading.
It also engaged an outside reviewer to examine issues following a failed rollout of its long-awaited $1.6 billion technology platform ANZ Plus.
ANZ shares rose almost one per cent to $36.28 on Friday afternoon.
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