ANZ bank faces a record $240 million penalty for engaging in “unconscionable conduct” in some of its bond trading for the federal government, as well as “widespread misconduct” affecting nearly 65,000 retail customers, said ABC News.
The bank has agreed to the penalty with the Australian Securities and Investments Commission (ASIC), although it will require Federal Court approval.
ASIC said the settlement included $125 million for matters related to Australian government bond trading, where the bank misreported trading data and acted “unconscionably” while managing a $14 billion bond deal, which ASIC said had the potential to reduce the amount of funding available to the government.
ASIC said that ANZ sold a large chunk of 10-year bond futures around the time the bond issue was priced, which placed downward pressure on bond prices and could have resulted in a shortfall in the bond sale.
ASIC said that, when the government later asked what had happened, the bank’s answers were misleading or deceptive.
ANZ said that ASIC has not alleged it engaged in market manipulation or over-hedging.
The bank said all trading undertaken by ANZ as duration manager was to hedge the risk borne by it in connection with its role on this transaction.
ANZ is also alleged to have overstated its bond trading turnover for nearly two years, which may have resulted in it winning more appointments as the lead for future bond issues.
The regulator said $115 million of the proposed penalty relates to customer failings.
ANZ failed to respond to 488 customer hardship notices, in some cases for more than two years.
ASIC said that the reasons for the hardship applications included unemployment, serious health issues, bereavement and family violence.
In some cases, ANZ undertook debt collection activities, including issuing default notices and bringing in external debt collection agencies, despite not having responded to the customer’s hardship application.
Separately, ANZ made false and misleading statements about some of its savings rates, failing to pay the promised introductory bonus interest rate to tens of thousands of customers.
The bank also failed to refund fees to thousands of dead customers and was slow in responding to loved ones trying to manage deceased estates.
As with the incorrect savings rates, ASIC said this was due to inadequate systems and processes that could not identify which fees should be waived or refunded, not whether any fees had already been waived or refunded.
ASIC said ANZ had already been penalised seven times in the past eight years for prior misconduct.