In Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2023] FCA 1150 the Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) to pay a $15 million penalty after it admitted to misleading customers as to the funds available to those consumers in certain credit card accounts. Background.

The Court found ANZ breached the ASIC Act and the National Consumer Credit Protection Act by falsely indicating customers could obtain a cash advance from funds stated to be their ‘Available Funds’ without incurring fees and interest.

The Court found ANZ had not cleared deposits into the credit card accounts, meaning the ‘Available Funds’ amount shown on ANZ’s internet banking platform, mobile application and ATMs was incorrect and was showing a larger amount than what was available for withdrawal without incurring fees or interest.

Customers who obtained a cash advance using an ANZ consumer credit card product based on these available funds were charged fees and interest even though the terms and conditions which governed the credit card product provided that, if the customer’s credit card account was in credit at the time ANZ processed the cash advance, that credit amount would offset the amount of the cash advance in the calculation of the fee and the customer may not be charged interest for the cash advance.

Acting efficiently, honestly and fairly

The Court also found ANZ did not act efficiently, honestly and fairly as required by section 47 of the Credit Act by failing to take timely action to address the problem.

Justice Beach agreed with previous decisions that “the words “efficiently, honestly and fairly” must be read as a compendium describing a person who goes about their duties efficiently having regard to the dictates of honesty and fairness, honestly having regard to the dictates of efficiency and fairness, and fairly having regard to the dictates of efficiency and honesty.”

In deciding that ANZ had failed to do so he took into account the following:

ANZ admits that from April 2018 to 23 September 2021, in circumstances where there was a risk that customers would misapprehend the circumstances in which fees and interest were charged on cash advances made on key ANZ channels using an ANZ consumer credit card, ANZ failed to do all things necessary to ensure that the credit activities authorised by its credit licence were engaged in efficiently, honestly and fairly, and therefore contravened s 47(1)(a) of the Credit Act. Let me focus on what was said to be a lack of efficiency or fairness.

First, ANZ did not amend the labels that it used to display a customer’s available funds and current balance on the key ANZ channels until September 2021.

Second, ANZ amended its ANZ consumer credit card product letters of offer in November 2018, except for customers who opened an ANZ Rewards Travel Adventures Card account from that time, and amended its ANZ Personal Banking Fees and Charges Booklet (the booklet) in September 2018 in a way that was not sufficient to make clear to customers the circumstances in which fees would be charged for cash advances.

Third, ANZ did not amend its letters of offer for customers who opened an ANZ Rewards Travel Adventures Card account from November 2018 until April 2021.

Fourth, ANZ reversed in September 2019 the amendments it made in September 2018 to the booklet, ith the result that between September 2019 and September 2021 the letters of offer and the booklet contained inconsistent descriptions of the circumstances in which fees would be charged for cash advances.

Fifth, ANZ did not remove all descriptions of the term “available funds” from its website in June 2018 and reinstated two web pages containing that description in July 2019 which appeared until July 2020 and October 2021 respectively.

Assessing the penalty

In discussing the appropriate penalty Justice Beach discussed the change in penalties that took effect in March 2019:

“Let me turn to the Credit Act. Prior to 13 March 2019, s 47(1)(a) was not a civil penalty provision.

Further, as the conduct constituting ANZ’s contravention of s 47(1)(a) did not occur wholly on or after 13 March 2019, no civil penalty has been sought in respect of that contravention (National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) sch 8, cl 3).

Nevertheless, I agree with the parties that the facts that gave rise to the contravention of s 47(1)(a) of the Credit Act may be taken into account when considering the penalty for the contraventions of s 12DB(1)(g) of the ASIC Act insofar as they are a feature of that contravening conduct and inform the nature and seriousness of the contraventions.

It follows that for contraventions subject to the former penalty regime, the maximum penalty for each contravention that occurred between 27 May 2016 and 30 June 2017 was $1.8 million, the maximum penalty for each contravention that occurred between 1 July 2017 and 30 June 2020 was $2.1 million, and the maximum penalty for each contravention that occurred on or after 1 July 2020 was $2.22 million.

For the small number of contraventions subject to the new penalty regime, the maximum penalty is either $525 million, being for contraventions that occurred between 13 March 2019 and 30 June 2020, or $555 million, being for contraventions that occurred between 1 July 2020 and 18 April 2021. Now ANZ’s annual turnover in each 12-month period since 13 March 2019 has been sufficiently high that 10% of that figure is greater than an amount equal to 2.5 million penalty units.”

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