A hearing was held before Justice Matthew Muir in the High Court at Auckland last month to determine the bank's penalty, before a judgment was delivered this evening.
"From approximately December 1998, ANZ issued some customers already holding an existing CCRI policy with one or more additional policies ("duplicate policies"). It did so due to deficiencies in its sales and fulfilment systems and errors in its computer systems," Justice Muir's decision reads.
Despite the breaches dating back more than 20 years, the FMA's claim only reflected the period since the introduction of the FMCA, which came into force in April 2014.
It was also the first civil proceedings the FMA has brought under the fair-dealing provisions in part two of the legislation.
ANZ accepted it charged 307 of the identified customers a total of $199,120.76 as a result of its errors, including premiums, interest and fees. It represented an average overcharge of $648.60 per customer.
"I accept that is a substantial amount," Justice Muir said.
ANZ said it self-reported the issues to the FMA in June 2019 and has also paid $440,000 in compensation to customers.
While the FMA acknowledged the bank had refunded the majority of its affected customers and compensated them for interest charged, it said there was still significant delay in doing so after the errors came to its attention.
The FMA identified ANZ was aware of the issues for more than a year, and close to two years in the case of the duplicate policies error, before reporting them to the financial markets watchdog.
But the bank argued there were complexities in identifying which accounts were affected, the duration of the problem, and the difficulties in quantifying interest entitlements for credit card holders who periodically or permanently carried ongoing debit balances.
ANZ's counsel, Andrew Horne, told the court last month: "It took time to chase rabbits down holes and identify what had gone wrong."
Justice Muir said he was prepared to accept it was a complex process.
"It would in my view have been preferable for ANZ, having identified those customers affected, to have notified them that a problem existed, albeit also advising that exact quantification of losses may take some further time to complete," he said in his decision.
"I do not, however, consider that this conclusion impacts materially on the penalty appropriately imposed. Overall, my assessment is that ANZ is entitled to substantial credit for what has been full compensation effected with reasonable timeliness in all the circumstances."
Justice Muir said overall the delay in self-reporting was an aggravating feature of the
breaches but was mitigated by ANZ's constructive engagement with the regulator since.
But the judge said to some extent the problems were "hiding in plain view" and were as easily identifiable in 2007 as they were a decade later.
"ANZ simply was not looking or looking adequately in the right places. That is a process or systems failure and as such general deterrence is a relevant consideration."
The FMA had sought the final pecuniary penalty of $280,000, which the ANZ also had agreed with, and declarations of contravention.
