ANZ and Commonwealth Bank gave hundreds and thousands of customers the green light for overdraft facilities despite not making reasonable inquiries about their finances.
The allegations were heard on the seventh day of public hearings for the banking royal commission, when both banks made a series of admissions that were incompatible with their obligations under the National Consumer Credit Protection Act.
Between 2011 and 2014, ANZ contacted anywhere between 240,000 and 590,000 customers each year with the "good news" that they had been pre-approved for an overdraft of between $500 and $1000.
ANZ would eventually admit to the Australian Securities and Investments Commission that it made 330,000 unsolicited offers to customers between November 2015 and February 2015 and would be fined $212,500.
Counsel assisting Albert Dinelli questioned ANZ's pricing operations chapter lead Heang Forbes whether contacting customers' cold with the offer met the responsible lending guidelines that credit providers are obliged to follow.
Advertisement
"Do you think that he requirement to make reasonable inquiries can be fulfilled without asking the client anything?" Mr Dinelli asked
"It's a broad question. Suppose it depends on the circumstances that are in play," Ms Forbes replied.
In the case of CBA, a system used to ascertain a customer's ability to pay an overdraft facility would record housing expenses of zero and default to expenses benchmark that stripped out discretionary expenses. Mr Dinelli asked CBA's Clive van Horen if this was an acceptable situation.
"So what came out of this system – and it I can use this term – what was spat out of by the automated systems – was not an accurate reflection of what the person's expenses were was it?" Mr Dinelli said.
"That's correct," CBA's Mr van Horen said.
CBA would pay $180,000 in fines and write off $2.5 million in bad and doubtful debts it had acquired as a result of the debacle that led to more than 10,000 customers granted overdrafts in error.
Minutes from a data governance meeting which included only the highest level executives indicated a broad awareness of the problems it was having with data management.
"Data management, as a strategic focus area and corporate discipline to prevent new instances of future asset value degradation, continues to be unfunded and lacks effective sponsorship," the minutes read.
Mr Dinelli would also tender documents that showed a request for $3 million to $4 million in funding to analyse the problem and stop it from happening again would be knocked back on its first attempt.
Mr van Horen said it was not unusual for funding requests to be knocked back especially in the early stages.
"There are many many projects that are seeking funding. There's a finite capacity to fund those. So a significant number of requests for funding will be declined ... so yes it was declined at the first meeting but the reality is that it is being supported."
Later in the afternoon ANZ's head of home loan products Sarah Mary Stubbings was asked to account for a series of errors that meant 230,000 customers were refunded $70 million after being charged the incorrect rate on thier home loans and failing to link deposit accounts for the purpose of offsetting.
The problems were described as "systemic" and the bank's response as a "band aid solution". One internal strategy document suggest remediation be staggered to lessen the financial impact on the bank with "complex" cases refunded last.
Bagikan Berita Ini
0 Response to "Banking royal commission: ANZ, CBA approved overdrafts no questions asked"
Post a Comment