ANZ has told the banking royal commission that continued processing errors saw it charge customers the wrong amount of interest and fees on their home loans to the tune of at least $90 million.
- Customers have been refunded $75 million so far for technical glitches which saw the wrong interest rates and fees charged
- The issue was raised in September 2014 by the bank’s technology division, the corporate regulator was notified in October 2017
- Commissioner Hayne took ANZ to task for not submitting emails relating to correspondence over compensation
Customers have been refunded $75 million so far and up to $18 million in compensation is expected to be paid before Christmas this year.
A number of customers who will receive compensation have yet to be informed about technical glitches which meant their offset accounts were not linked to their home loans.
ANZ head of home loan product, Sarah Mary Stubbings, said the bank had paid an additional $130 million in compensation over the last 10 years, which included repayment for processing errors with home loans.
Ms Stubbings told Commissioner Kenneth Hayne that the recurring technical problems were caused by system or process failures.
“You’re the relevant bank executive, do you think it is providing financial services efficiently, honestly and fairly if the customer is charged the wrong interest rate?” Commissioner Hayne asked.
“I think if the customer is charged the wrong interest rate then that is not a good outcome for a customer,” Ms Stubbings replied.
The commission also heard from ANZ documents read out by counsel assisting the commission, Albert Dinelli, that processing errors around interest rates and home loans were first raised internally by the bank in 2011.
In September 2014, the bank’s technology division raised it as an issue, and the problems were referred to an outside law firm in the same month.
The corporate regulator was notified about the technical glitches in October 2017.
One processing error involving interest rate discounts not being applied to home loans was discovered by staff in Bangalore, India in December 2016 but the bank’s risk committee was not told until April 2017.
Ms Stubbings said the mistake, which affected 1,860 customers to the tune of nearly $1 million, was a failure of process because of a big surge in requests for interest-rate discounts.
Under questioning by Mr Dinelli, Ms Stubbings agreed ANZ had experienced a string of technical glitches which had caused mistakes which caused mortgage customers to be charged the wrong interest rate.
“But these problems have kept on happening haven’t they, Ms Stubbings?” Mr Dinelli asked.
“Yes,” Ms Stubbings said.
“And that falls short of what your customers expect of you doesn’t it. And what community expectations would be of ANZ.” Mr Dinelli added.
“Yes,” Ms Stubbings admitted.
Ms Stubbings also admitted the bank had delayed submitting significant breach reports on the software problems to the corporate regulator, the Australian Securities and Investments Commission (ASIC), on a number of occasions.
Mr Dinelli asked Ms Stubbings about a delay in notifying ASIC about an issue involving fee waivers and discounts not being applied to home loans of 2,900 customers.
ANZ discovered the issue in March and July 2017 but did not formally submit a breach report to ASIC until October of that year.
Ms Stubbings said she was highly aware of the requirement to submit breach reports under the Corporations Act within 10 days of a breach or likely breach occurring.
Commissioner Kenneth Hayne told Ms Stubbings that he may look at whether or not the bank complied with the Act.
Yesterday Ms Stubbings said the bank refunded $69.3 million for interest-rate mistakes made on home loan offset accounts, and admitted the process of compensating customers took nearly 10 years.
In what is becoming a familiar theme at the commission, with banks failing to submit relevant documents despite being ordered to by Commissioner Hayne, he took ANZ to task for not submitting emails relating to correspondence between ANZ and ASIC in early 2017 over compensation for customers who were given unsolicited overdrafts they could not afford to pay back.
Counsel for ANZ, Matthew Collins, QC, said the document was reviewed but “inadvertently misclassified as not responding to that category.”
“On behalf of the ANZ Bank I apologise for the omission and assure you, Commissioner, that steps are being put in place to reassure you that this sort of omission does not reoccur,” Mr Collins told the hearing.