ANZ ‘betrayed the trust of Australians’, bank agrees to pay record $240 million in fines

ANZ Banking Group has reached a deal with regulator ASIC to pay $240 million in fines as compensation for multiple operating failures, including charging fees to deceased customers, ignoring hardship pleas from vulnerable clients, making false statements about savings rates, and manipulating bond trading data.

“Time and time again ANZ betrayed the trust of Australians,” ASIC chairman Joe Longo said.

“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.”

Ordinary customers hammered

ANZ’s retail banking blues affected tens of thousands of customers and led to a total of $115 million in fines as the lender admitted to failing to refund fees charged to dead customers and not responding to loved ones dealing with deceased estates.

The bank’s retail division also admitted to making misleading statements about savings rates and failing to pay promised interest rates, for which it accepted a $40m fine.

In total nearly 195,000 accounts were underpaid bonus interest over the period between July 2013 and January 2024, with the error requiring ANZ to compensate investors by $10.4m between May and July 2025.

“This is quite an extraordinary failure by ANZ,” ASIC’s deputy chairperson, Sarah Court, told The Nightly on Monday afternoon. “It persisted for more than a decade and getting interest payments right is a basic part of banking.”

Ms Court also pointed to the fact that ANZ had paid a $25m penalty in 2022, which related to a failure to honour promises they’d made to customers about the benefits of offset transaction accounts.

On Monday, another $40m fine was imposed for 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.

“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,” Mr Longo added.

“There are fundamental issues with ANZ’s risk and compliance culture that require the Board’s and executives’ urgent attention.”

Troubled bank

Last week, ANZ’s new chief executive Nuno Matos revealed plans to axe 4500 jobs from the bank, which equals around 10 per cent of its total workforce, as the lender seeks to reset its culture and prepare for a decade of disruption linked to advances in artificial intelligence.

The bank’s shares fell 0.8 per cent to $32.92 on Monday and have advanced 16 per cent year to date, although they are roughly flat over the past decade as it struggles to manage costs and grow profit margins.

ANZ’s cash profit for the six months to March 31 reached $3.6 billion, with Ms Court stating that the level of fine imposed on the bank is ultimately decided by the courts, not the regulator.

“The issues the court takes into account when imposing penalties are what is sufficient to send a deterrent message...and then more generally what is the level of penalty required to send a broader message of general deterrence to the banking sector?,” Ms Court said.

“So it’s an art, not a science. We look at a range of things. Like the history of misconduct, how many other contraventions there have been, and whether or not the conduct is deliberate.”

Investors’ views

Anna Milne, a deputy portfolio manager at Wilson Asset Management, said today’s confession and apology from ANZ gives the bank and its under pressure Portuguese boss the chance to draw a line in the sand after a tough couple of months.

“Today’s news is not a surprise to the market and gives clarity around the problems,” Ms Milne said. “On the (analyst) call this morning they were quite clear it’s a line in the sand. Nuno (Matos) the new CEO has been very clear he wants to set the business up for future success and you can’t look forward while you’re focused on what’s behind you.”

Wilson Asset Management owns ANZ shares in its WAM Leaders Fund and WAM Income Maximiser Fund, with Ms Milne backing ANZ’s outsider chief executive to turn its performance around.

“There’s going to be a lot of heavy lifting over the next 12 to 18 months to get the bank to where he wants it,” she said. “We’re seeing job cuts across every bank at the moment and unfortunately it’s a reality of the AI era we’re entering. Some of the cuts are also related to productivity initiatives and some are related to initiatives that weren’t generating profits, so as shareholders we’re on board with the strategy.”

Institutional failings

ANZ’s institutional banking business also accepted total fines of $115m after admitting to engaging in unconscionable conduct by incorrectly reporting bond trading data and mismanaging the execution of a 10-year Australian government bond issue.

“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,” said Mr Longo.

In an announcement to the stock exchange Monday morning, ANZ’s new chief executive Mr Matos acknowledged the significant failings and said that they reinforce the case for change at the big-four lender.

“It is my expectation that we see measurable improvements across the bank to better protect and care for our customers and to create a more sustainable business,” Mr Matos said.

ANZ has committed to an ASIC Matters Resolution Program to help monitor its compliance with commitments to fix the failings identified. The cost of implementing the remedial procedures and plans is forecast to reach $150 million over the financial year ending September 30, 2026.

The bank’s treatment of deceased estates, hardship processes, and certain online savings products are all subject to enforcement undertakings, which means an independent expert will review and report on ANZ’s commitment to remediation programs.

Banks face change

According to Ben Clark, a portfolio manager at Sydney-based asset manager TMS Capital, some of ANZ’s regulatory problems and ballooning costs can be traced back to the consequences of the Banking Royal Commission’s final recommendations in 2019.

“From what I understand post Royal Commission the banks had to put on so many compliance and risk people and I think that’s where a lot of the cost growth has come from,” he said.

The high-profile fund manager added that he felt ANZ had under-invested in digital technologies and online customer experiences, versus the market leader Commonwealth Bank.

“I think it’s been known in the market a long time that ANZ, NAB and Westpac had underinvested in IT systems,” Mr Clark said.

“So yeah if you see ANZ didn’t pay customers the right interest (rates) and this highlights the issue as they’ve got probably hundreds of thousands of accounts to manage, so you’ve got to invest in the tech. Their IT spend probably hasn’t kept up with the pace required so it can lead to these (operational) problems.”

Last week saw a huge round of job cuts announced across Australian banks including 410 staff to go at NAB, 200 to depart at Bank of Queensland, and 158 to leave Bendigo & Adelaide Bank. Mr Clark suggested the lenders would continue to let roles become redundant on a piecemeal basis, as they seek to replace workers with AI capable of performing equivalent tasks.