The Federal Court fined ANZ Bank $25 million as a result of problems with the Breakfree Benefits programme that were caused by complex, siloed IT systems.
ANZ is also required to pay $211 million in remediation fees to impacted consumers as part of a case initiated by the Australian Securities and Investments Commission and approved by the court this week.
For a yearly subscription, the Breakfree package, which was first presented in 2003, waived fees and provided interest rate savings on a number of ANZ products, including transaction accounts, credit cards, and home loans.
Complex systems were clearly a factor in the breach, according to the statement of agreed facts [pdf] that was included as part of the case’s evidence.
As faults were discovered through reviews over time, “ANZ explored investing in an automated solution to resolve known issues” about 2010; however, by “January 2011, ANZ chose not to invest in such a solution.”
The bank mishandled the distribution of benefits, the Federal Court of Australia decided, and around 689,000 client accounts did not obtain fee waivers and interest rate savings over a period of 20 years.
The bank was found to have neglected “to maintain proper procedures and processes, which resulted in packages not always being handed down to the clients,” according to the court.
“Having the requisite procedures and processes to guarantee clients are given the benefits they are promised is not an optional extra, it is a requirement,” stated Sarah Court, deputy chair of ASIC.”
“ANZ is a sizable financial institution that, for a long time, failed to prioritise and implement the systems and processes required to carry out its commitments, “She spoke.
ASIC’s fines from the Financial Services Royal Commission enforcement work, the court observed, “should serve as a reminder to financial institutions that they must invest in their systems to ensure customers are not negatively affected or injured.”