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The Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) to pay $250 million in penalties for widespread misconduct and systemic risk failures, after the bank admitted to unconscionable conduct in dealings with the Australian government, misreporting bond trading data by tens of billions of dollars, failing to properly manage customer hardship cases, providing misleading information on savings interest rates, and mishandling deceased estates affecting thousands of customers.
In September of this year, the financial regulator had asked the court to order the major bank to pay around $240 million in penalties for four separate court proceedings spanning misconduct across ANZ’s institutional and retail divisions.
However, this has now been increased to $250 million after the judge increased the penalty for inaccurate reporting of secondary bond market turnover data by $10 million (bringing the penalty in relation to that misconduct to $50 million and the total to $250 million).
The four matters filed against ANZ included:
- Unconscionable conduct on government bond deal: ANZ overstated secondary market bond turnover, while managing a $14 billion bond issuance for the Australian government, misleading officials over nearly two years.
- Financial hardship mishandling: Between May 2022 and September 2024, ANZ failed to respond to 488 hardship notices, sometimes for over two years, despite personal circumstances including unemployment, illness, bereavement, and family violence. Remediation has included payments of $92,687 and credit report corrections.
- Bonus interest mispayments: Between July 2013 and March 2025, ANZ failed to pay correct interest rates on tens of thousands of accounts due to system and process failures, with remediation ongoing.
- Deceased estates: Between July 2019 and June 2023, ANZ failed to refund fees for thousands of deceased customers and was slow to respond to estate representatives. Remediation included over 18,900 accounts and $3.8 million in repayments.
On Friday (19 December), the court released its orders.
Justice Jonathan Beach has now ordered ANZ to pay:
- $135 million in combined penalties for institutional and markets misconduct relating to the management of a $14 billion government bond deal and inaccurate reporting of secondary bond market turnover data to the Australian Government. This includes a record $80 million penalty for unconscionable conduct,
- $40 million for failing to respond to hundreds of customer hardship notices, in some cases for more than two years, and failing to have proper hardship processes in place,
- $40 million for making false and misleading statements about savings interest rates, and failing to pay the promised interest rate to tens of thousands of customers, and
- $35 million for failing to refund fees charged to thousands of dead customers and not responding to loved ones trying to deal with deceased estates inside the required timeframe.
Speaking about the management of the $14 billion government bond deal, Justice Beach said: "ANZ did not act conscionably, did not act transparently, nor did it trade in the way in which it said it would but, to the contrary, it conducted its hedging in a manner which caused undue pricing pressure on the reference price product at the time of pricing.
"ANZ’s behaviour was particularly serious when coupled with ANZ’s inaccurate and incomplete statements to the AOFM in relation to the manner of its trading and behaviour as a duration manager, when post-completion of the issuance the AOFM expressed concern about the price at which the bond issuance had priced. ANZ’s post-completion conduct reveals a lack of candour and frankness about its trading."
In deciding to increase the penalty for the misreporting conduct by $10 million to $50 million in total, the Court found ANZ's conduct was both ‘inexcusable’ and had "no redeeming feature whatsoever" and that a "very substantial penalty needs to be imposed to achieve both specific deterrence and general deterrence".
"Accurate information is the life-blood of the AOFM in its assessment of the activities in the relevant markets and the position of the participants."
Justice Beach also reflected on the "serious and unacceptable nature of the contraventions" in relation to the retail matters, adding that penalties were "not to be regarded as a cost of doing business".
The $35 million penalty for ANZ’s misconduct relating to deceased estates "puts a price on the contraventions that is appropriate to deter both repetition by ANZ and contravention by other licensees," he said.
However, the judge noted that ANZ had "engaged constructively with ASIC in advance of this proceeding being commenced, including by making admissions in relation to its conduct at the earliest available opportunity, acknowledging liability in respect of the admitted contraventions".
Reacting to the court orders, ASIC chair Joe Longo said: "ANZ is a critical part of Australia’s banking system and, frankly, they must do better.
"The size of the penalties ordered today underscores the seriousness of ANZ’s misconduct and its far-reaching consequences for the Government, taxpayers and tens of thousands of customers.
"ANZ must overhaul its non-financial risk management and put the interests of clients, customers and the public first."
He said that the bond trading and misreporting matter had exposed the Australian Government to "a significant risk of harm, denied the Government an opportunity to protect itself and the public interest, and mislead the government for nearly two years by overstating bond trading volumes by billions of dollars".
"ASIC estimates ANZ’s trading misconduct cost up to $26 million, reducing funds that could have supported essential public services," Longo said.
ASIC deputy chair Sarah Court added: "Tens of thousands of customers suffered from systemic failures across ANZ’s retail bank, which extended to fundamental banking basics like paying the correct interest rate on savings accounts.
"ANZ will also pay for misconduct that made an already difficult time far harder for hundreds of its customers who were experiencing hardship or dealing with the loss of a loved one.
"This outcome sends a clear message to ANZ that it needs to do better by its customers and to all banks that the cost of breaking the law is not an acceptable cost of doing business," she said.
In a statement following the court orders, ANZ said: "ANZ is focused on significantly improving its management of non-financial risks across the bank, with a dedicated program of work underway as part of its Root Cause Remediation Plan.
"In addition, ANZ has established an ASIC Matters Resolution Program within Australia Retail to meet commitments to ASIC to deliver improvements across a number of areas in its Retail division.
"Both programs of work will be reviewed by Promontory, an independent expert appointed to review and report on progress and delivery of this work."
ANZ said the financial impact of the revised civil penalties and ASIC’s costs are almost wholly covered by existing provisions, including a $240 million penalty provision.
[Related: ANZ faces largest ever ASIC penalty for misconduct]