ANZ Slapped With Record A$240M Fine Over “Unconscionable” Conduct

ANZ will pay A$240 million (about US$160 million) — the biggest penalty the corporate regulator ASIC has ever sought against a single entity — to settle four cases that exposed years of messy compliance and conduct failures affecting nearly 65,000 customers and even a multibillion-dollar government bond deal.

ASIC says ANZ acted unconscionably while managing a A$14 billion Commonwealth bond issue, overstating trading volumes by tens of billions and filing misleading reports for almost two years — behavior the watchdog says put public funds for health, welfare, education, infrastructure and defense at risk. That count alone carries a record A$80 million penalty, folded into A$125 million for institutional and markets breaches.

The remaining A$115 million covers three retail scandals:

• Hardship failures: ANZ didn’t respond to hundreds of hardship notices — in some cases for more than two years — and still pushed debt collection.
• Savings-rate spin: The bank made false or misleading claims about bonus interest and didn’t pay the promised rates to tens of thousands of customers.
• Fees to the deceased: ANZ kept charging dead customers and routinely failed to deal with bereaved families within required timelines.

“Time and time again ANZ betrayed the trust of Australians,” ASIC chair Joe Longo said, blasting “significant failures” to manage non-financial risk and warning the board and executives to fix the bank’s risk and compliance culture.

ANZ has admitted the allegations (it says it doesn’t believe the Commonwealth suffered losses) and will ask the Federal Court to approve the penalties. Chair Paul O’Sullivan issued an apology:

“We made mistakes that had a significant impact on customers.”

New CEO Nuno Matos said the failings “reinforce the case for change” and promised measurable improvements.

Bottom line: From fudged bond-market data to ignoring people in hardship and billing the dead, ASIC’s blockbuster fine is a blunt message to Australia’s banking elite: clean up your culture — or pay up.

The Financial Times, Bloomberg, the Guardian, the Hill, and Reuters contributed to this report.