Australia’s banking sector faces fresh scrutiny as Australia and New Zealand Banking Group (ASX: ANZ) admits to widespread misconduct spanning multiple years and agrees to pay a record $240 million in penalties.
The punishment represents the largest fine ASIC has ever imposed on a single entity, highlighting the regulator’s toughened stance following the Banking Royal Commission.
The ANZ misconduct fine covers four separate proceedings that exposed systematic failures across both retail and institutional banking divisions. From misleading government bond trading reports to failing vulnerable customers during hardship, the bank’s actions have drawn sharp criticism from regulators and industry observers alike.
Breaking Down the $240 Million Penalty Structure
The major bank has accepted allegations of misconduct with penalties of $240 million tied to four separate proceedings spanning misconduct across its Institutional and Retail divisions. The breakdown reveals the scope of ANZ’s regulatory failures:
Institutional and Markets Penalties ($125 million):
- $85 million for unconscionable conduct in government bond trading
- $40 million for false reporting of secondary bond turnover data
Retail Banking Penalties ($115 million):
- $40 million for failing to pay promised interest rates on savings accounts
- $40 million for breaching hardship notice obligations
- $35 million for deceased estate mishandling
The misconduct occurred over many years and was marked by ANZ’s significant failure to manage non-financial risk across the bank.
Government Bond Trading Scandal Exposes “Unconscionable Conduct”
The largest single penalty stems from ANZ’s role in managing a $14 billion government bond deal. When working on the deal with the Australian Government’s sovereign debt management agency, ANZ reportedly incorrectly reported its bond trading data, overstating volumes by tens of billions of dollars over almost two years.
ANZ Headquarters in Docklands, Melbourne
ASIC discovered that instead of trading gradually to limit market impact, ANZ sold a significant volume of 10-year Australian bond futures around the time of pricing, which placed undue downward price pressure on the bond price.
Key findings include:
- Misleading reports to the Australian Office of Financial Management (AOFM)
- Trading practices that potentially reduced government funding
- Breach of basic licensee obligations
The regulator emphasised that this funding is used to support critical services, including Australia’s health and education systems, affecting all Australians.
Retail Banking Failures Impact Thousands of Customers
ANZ’s retail banking misconduct affected nearly 65,000 customers across multiple product lines. The bank systematically failed to deliver basic services promised to customers.
Interest Rate Misrepresentations:
Between July 2013 and March 2025, ANZ promoted offers on its website to pay introductory bonus interest to customers who opened certain new accounts. However, due to process deficiencies in ANZ’s systems, the bonus interest was not always applied.
The impact was significant:
- 194,487 accounts required remediation (7.26% of accounts opened during the period)
- 56,703 customers affected by inaccurate interest rate advertising
- Approximately $480,000 in unpaid interest
Hardship Notice Failures:
ANZ failed to properly manage customer hardship cases, leaving vulnerable customers without adequate support during financial difficulties. This represents a fundamental breach of banking sector obligations to assist customers facing temporary financial stress.
Deceased Estate Mishandling Adds to Customer Impact
ANZ failed to refund fees charged to dead customers and breached obligations concerning deceased estates between July 2019 and June 2023. This misconduct particularly affected grieving families already dealing with loss.
The bank’s failures included:
- Continuing to charge fees on deceased customer accounts
- Delays in processing estate-related requests
- Over 18,900 customer accounts requiring $3.8 million in remediation
Leadership Response and Accountability Measures
ANZ Chairman Paul O’Sullivan acknowledged the bank’s failures in a public statement. “The reality is we made mistakes that have had a significant impact on customers. On behalf of ANZ, I apologise and assure our customers we have taken the necessary action, including holding relevant executives accountable“.
CEO Nuno Matos was equally direct: “The failings outlined are simply not good enough and they reinforce the case for change“.
Regulatory Response Reflects Post-Royal Commission Era
ASIC Chair Joe Longo delivered a scathing assessment of ANZ’s conduct. “Time and time again ANZ betrayed the trust of Australians. Banks must have the trust of customers and government. This outcome shows an unacceptable disregard for that trust that is critical to the banking system“.
The regulator’s response reflects the tougher enforcement approach adopted following the Banking Royal Commission, which exposed widespread misconduct across Australia’s financial services sector.
APRA Imposes Additional Capital Requirements
Beyond ASIC’s penalties, the Australian Prudential Regulation Authority (APRA) has accepted a Court Enforceable Undertaking (CEU) from ANZ to address ongoing weaknesses in the bank’s non-financial risk management practices and risk culture.
APRA Chairman John Lonsdale explained the decision: “ANZ remains financially sound with robust levels of capital and liquidity, however problems with the bank’s management of non-financial risks are persistent and prevalent across the bank“.
Additional regulatory measures include:
- $1 billion capital add-on (increased from $750 million)
- Court enforceable undertaking requirements
- Independent monitoring and reporting obligations
Market Impact and Share Price Response
Australian banking stocks faced immediate pressure following the announcement. ANZ Group Holdings Ltd (ASX: ANZ) share price is starting the week in the red. In morning trade, the banking giant’s shares are down 1% to $32.86.
The market reaction reflects broader concerns about regulatory risks facing Australia’s major banks. Recent ASX trading data shows continued volatility in the financial services sector as investors reassess regulatory compliance costs.
ANZ Share Price
Historical Context: Pattern of Banking Misconduct
This latest penalty adds to ANZ’s growing list of regulatory breaches. Including the current penalties, ASIC has brought 11 civil penalty proceedings against ANZ since 2016, with proposed and ordered penalties totalling more than $310 million.
The pattern reflects industry-wide issues first exposed during the Banking Royal Commission, which recommended fundamental changes to banking culture and oversight.
Broader Implications for Australia’s Banking Sector
The record fine sends a clear message about regulatory expectations in the post-Royal Commission environment. Financial service entities can therefore expect, for the time being, a more aggressive approach on enforcement from regulators who are now displaying a stiffened resolve to apply and enforce the law.
Key implications include:
- Increased compliance costs across the sector
- Greater focus on non-financial risk management
- Enhanced customer remediation requirements
- Ongoing regulatory scrutiny of major banks
Customer Remediation and Future Safeguards
ANZ has committed to comprehensive remediation programs addressing all affected customers. ANZ has launched an ASIC Matters Resolution Program within its retail business to improve oversight and governance in areas such as hardship processes, online saver accounts, and deceased estates.
The bank will also submit a Root Cause Remediation Plan to APRA, with approximately $150 million earmarked for implementation in FY 2026.
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Looking Forward: Industry Reform Continues
The ANZ misconduct fine represents another milestone in Australia’s ongoing banking sector reform. While financial markets continue to function effectively, regulatory focus on customer outcomes and corporate accountability remains intense.
For banking customers, the penalties serve as a reminder of available protections and the importance of reporting issues to appropriate authorities. The case demonstrates that even Australia’s largest financial institutions face serious consequences when they fail to meet community expectations.
The Federal Court must still approve the proposed penalties, with final orders expected to include additional requirements for ongoing compliance monitoring and reporting.
