ASIC has announced that 3 banks have recently made compensation arrangements for separate incidents of unclear fee disclosures.

ANZ Bank and periodical payment fees

Australia and New Zealand Banking Group Limited (ANZ) is refunding $28.8 million to 376,570 retail accounts, and 17,230 business accounts, after it failed to clearly disclose when certain periodical payment fees would apply.　

The account terms and conditions stated that a periodical payment was a transaction to ‘another person or business.’ This meant that transactions made by the customer to another account in the customer’s own name, whether with ANZ or another financial institution, were not covered by ANZ’s own definition of a periodical payment and could not be charged the fees that could otherwise apply to periodical payments. 　

ANZ discovered that it was charging fees on payments made between accounts held in the customer’s own name, contrary to its definition of a ‘periodical payment’. ANZ subsequently reported the matter to ASIC as a significant breach of its financial services obligations.

As a result, ANZ will refund fees that were charged to customers for payments into another account in the customer’s own name. These fees include: 　

• non-payment fees charged on personal and commercial accounts when the payment did not proceed because of insufficient funds held in the ANZ deposit account; and
• payment fees charged on commercial accounts when a payment is processed from the ANZ deposit account.

ANZ has subsequently changed its terms and conditions to clarify instances where fees for periodical payments apply to an ANZ deposit account.

Westpac credit card foreign transaction fees

Westpac Banking Corporation (Westpac) has refunded approximately $20 million to around 820,000 customers for not clearly disclosing the types of credit card transactions that attract foreign transaction fees.

Following a customer complaint, Westpac notified ASIC that customers may have been incorrectly charged foreign transaction fees for Australian dollar transactions processed by overseas merchants. Because Westpac’s terms and conditions did not clearly state that foreign transaction fees would be charged for such Australian dollar transactions, Westpac commenced a process to identify affected customers and provide refunds with interest.

Westpac has updated its disclosure to clarify that Australian dollar transactions – when they are processed by overseas merchants – will also attract a foreign transaction fee.

ING Bank compensates Living Super customers

ING Bank (Australia) Limited, the promoter and investment manager of the ING Direct Superannuation Fund (Living Super), will compensate around 24,500 members approximately $5.38 million following ASIC concerns that some members of Living Super may have been misled into believing they would receive the same returns on cash investments held with ING bank as ING Direct banking customers with the Savings Maximiser product.

ASIC was concerned that ING Bank promoted Living Super, between March 2015 and September 2016, as having ‘No Fees’ for the ‘Cash Investment Option’, ‘No Investment and Administration fees’ for the ‘Balanced Option’ and having low fees options without making it clear that customers were paid a lower interest rate on the cash portion invested with ING Bank than the rate paid by ING Bank to its Saving Maximiser customers for the relevant investment options. Some of the promotions also did not indicate the “no fees or low fees” features may not continue should ING Bank no longer be the investment manager.

ING Bank has acknowledged that its communication could have been clearer and is writing to all members of Living Super to inform them that the interest rates paid on Living Super may be different to the rates paid to direct banking customers and further, that the fees for Living Super may change should ING Bank no longer be the investment manager.

ING Bank have advised ASIC they will also write to affected members informing them of the compensation paid and will not retain any of the financial benefit from the lower interest rate that was applied.

ING Bank has told ASIC that it will no longer be promoting Living Super based on No Fees or No Investment and Administration Fee. It has made changes to its internal policies and procedures to help ensure that similar potentially misleading promotions are not undertaken.