Charge increases pressure on Westpac to reveal whether its compensation costs have risen

This article is more than 11 months old

This article is more than 11 months old

ANZ says it will take a $682m hit this year to compensate customers who it ripped off over the past decade, adding to a remediation bill that has already climbed into the billions across the scandal-plagued banking industry.

The remediation charge, announced to the Australian Securities Exchange on Tuesday, follows a similar $1.2bn slug revealed by NAB last week and increases pressure on Westpac to reveal whether its compensation costs have also risen.

It means that across the industry the cost to banks of compensating customers, estimated by the Reserve Bank at $7.5bn before NAB and ANZ’s new charges, is likely to climb beyond the $10bn mark.

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Over the past two years ANZ has spent more than $1bn on compensating customers, the bank told the market. And costs could climb again because “reviews remain ongoing”.

“We are well progressed in fixing issues and have a dedicated team of more than 500 specialists working hard to get any money owed back to customers as quickly as possible,” said its chief financial officer, Michelle Jablko.

ANZ, NAB and Westpac end their financial year on 30 September, meaning they are all due to reveal their profits for the 2019 year this month.

But Westpac has yet to tell the market whether it also faces an increased compensation bill. The bank has been contacted for comment.

The breaches being investigated by ANZ’s internal team are believed to stretch back as long as a decade. Of the $682m in extra remediation costs revealed on Tuesday, $475m relates to fees charged to customers by its retail bank.

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The corporate regulator has launched federal court action against ANZ over more than 1.3m allegedly illegal transfer fees, while the bank’s practice of continuing to charge account fees to thousands of customers who were entitled to an offset because they also had a home loan was closely examined at last year’s financial services royal commission.

ANZ’s remaining $207m hit relates to fees charged for advice by its former wealth management business, much of which it has offloaded to another royal commission target, IOOF.

The bank has successfully offloaded its advice networks to IOOF but is still waiting for approval to transfer its pensions business.

This process has been under a cloud because IOOF has been under fire from the prudential regulator.

But a fortnight ago the federal court threw out attempts by the Australian Prudential Regulation Authority to ban the former IOOF boss Chris Kelaher and the former chairman George Venardos from the superannuation industry.