Australia and New Zealand Banking Group (ANZ) is facing a historic $240 million penalty for its alleged role in “unconscionable conduct” related to federal government bond trading. This fine also comes from “widespread misconduct” that reportedly impacted nearly 65,000 retail customers. The bank has reached a settlement on the penalty with the Australian Securities and Investments Commission (ASIC), but it still needs approval from the Federal Court. This investigation is the eleventh civil action ASIC has taken against ANZ since 2016.
During a press conference, ASIC Chair Joe Longo said that ANZ has “fallen short time and time again” and “betrayed the trust of Australians.” He described some of the bank’s actions as “grubby,” leading many to doubt their confidence in the bank.
Record Penalty for Bond Trading
A large part of the settlement, $85 million, is linked to futures trading that ANZ conducted while managing the sale of $14 billion in Australian government bonds on April 19, 2023. As the “duration manager” for the Australian Office of Financial Management (AOFM), ANZ had the important task of reducing interest rate risk for the Commonwealth. Mr Longo emphasized that this was a “prestigious and trusted role.”
ASIC believes that ANZ sold an unusually high volume of bond futures before the sale, which led to a 2-basis-point drop in the bond’s price and increased the interest rate the Australian government had to pay on the $14 billion debt. Mr Longo stated that this misconduct may have cost the government $26 million, money that could have been used for essential services like healthcare and education. He also pointed out that ANZ was not transparent with the government about its trading activities.
In response, ANZ Chair Paul O’Sullivan insisted that the government did not incur losses and noted that ASIC had not accused the bank of market manipulation or over-hedging. He explained during an analyst briefing that the bank had violated some of its licence obligations and that hedging, by its nature, affects the market. Mr O’Sullivan mentioned that many market professionals at the bank felt their reputations had been damaged.
However, Mr Longo insisted that ANZ’s actions during the bond sale were far below the expected standard. He stated that the bank failed to be transparent with the AOFM and didn’t follow its own policies and procedures, calling the actions “unconscionable” and “grubby.” In a later statement, Mr O’Sullivan apologized to the AOFM for “inadequate communication,” offered to refund the profits from the deal, and mentioned that the board had reviewed accountability, resulting in significant pay cuts for some executives.
Additionally, ANZ is accused of inflating its bond trading turnover for nearly two years, which may have helped the bank obtain more lead roles for future bond issues. This allegation led to an extra $40 million penalty. Mr O’Sullivan expressed his belief that the settlement would now resolve the bond issue, allowing the bank to move on.
Widespread Customer Failings
The remaining proposed penalty of $115 million addresses several customer-related failures. ASIC revealed that ANZ failed to respond to 488 customer hardship notices, some for over two years. ANZ received these applications for various reasons, including unemployment, severe health problems, bereavement, and domestic violence. In some instances, the bank pursued debt collection and even involved external agencies without addressing the customers’ hardship requests.
ANZ also made false and misleading statements about some of its savings’ rates. It failed to pay the promised introductory bonus interest to tens of thousands of customers. The bank had already compensated nearly 200,000 customers affected between July 2013 and January 2024. However, a similar problem arose, causing another 26,900 customers to be underpaid between August 2024 and March 2025.
The bank was also found to have not refunded fees to thousands of deceased customers and was slow to assist their loved ones in managing their estates. ASIC attributed these problems to poor systems and processes. This is the eighth time ANZ has faced penalties for misconduct since 2016.
In a statement, Mr O’Sullivan admitted that the bank had “made mistakes that have had a significant impact on customers” and apologized, assuring customers that the bank had taken necessary steps, including holding relevant executives accountable. Nuno Matos, ANZ’s new chief executive, who recently announced a reduction of 3,500 staff and about 1,000 contractors, stated that the noted failures were “simply not good enough” and reinforced the need for change. He expects measurable improvements to better protect and serve customers and to create a more sustainable business.
