ANZ Refunds Accounts After Errors Over Payment Fees

Tom Burroughes

7 September 2016

Australia and New Zealand Banking Group is repaying a total of A$28.8 million ($21.8 million) to 376,570 retail accounts and 17,230 business accounts after failing to clearly disclose when certain periodical payment fees would apply, the Australian regulator said yesterday.

Explaining the position, the Australian Securities and Investments Commission referred to ANZ’s conduct over periodical payments, which are automatic “set and forget” fixed-amount payments put in place by the customer.

These payments are an alternative to direct debit arrangements, and allow customers to establish a regular payment to another account (for example, to make fortnightly rental payments). Banks may charge a fee for this service, depending on the terms and conditions for the account. In ANZ's case, the account terms and conditions stated that a periodical payment was a transaction to “another person or business”. This meant that transactions made by the customer to another account in the customer's own name, whether with ANZ or another financial institution, were not covered by ANZ's own definition of a periodical payment and could not be charged the fees that could otherwise apply to periodical payments, the regulator said.

The watchdog said that ANZ discovered that it was charging fees on payments made between accounts held in the customer's own name, contrary to its definition of a periodical payment. ANZ reported the matter to ASIC as a significant breach of its financial services obligations.

The watchdog said it acknowledged the bank had been co-operative and reported the issue.

The total amount being refunded includes around A$25.8 million of fees, with an additional A$3 million in interest.

ANZ has subsequently changed its terms and conditions to clarify instances where fees for periodical payments apply to an ANZ deposit account.