New Zealand Financial Markets Authority agrees enforceable undertaking with ANZ including NZD 3.25 million payment for misleading overdraft fee and mortgage incentive claims

The New Zealand Financial Markets Authority published an enforceable undertaking under which ANZ has admitted breaching fair dealing provisions of the Financial Markets Conduct Act (FMCA) and agreed to pay NZD 3.25 million to the Crown in lieu of a pecuniary penalty. The breaches related to misleading representations to customers about unarranged overdraft fees and about ANZ’s right to require repayment of mortgage cash contributions. On overdrafts, ANZ charged an unarranged overdraft fee and excess interest when a payment was ultimately dishonoured, despite its terms and conditions allowing either the fee to be charged or the payment to be dishonoured. Between 20 December 2012 and 31 May 2023, the issue affected 209,960 customers from April 2014 (when the FMCA came into force), with overcharges since then totalling NZD 4,373,972 (NZD 3,494,894 in fees and NZD 879,078 in excess interest), plus NZD 1,019,459 in ‘use of money’ amounts; ANZ remediated current customers, attempted to contact former customers, and paid former customers who claimed. On mortgage incentives, ANZ sought repayment of cash contributions when customers discharged their mortgages within two to three years based on an assumption they had moved banking to a competitor, but later could not verify a breach for 1,019 customers and remediated them; the FMA characterised this as false representations under section 22(h) of the FMCA. The undertaking includes payments of NZD 2,080,000 for the overdraft fee representations and NZD 1,170,000 for the cash contribution representations, and records ANZ’s commitment to develop and maintain policies, systems and processes aimed at preventing recurrence. ANZ also introduced a new process requiring customers to provide a reason for discharge and clarifying when ANZ can require repayment of a cash contribution.