ANZ Bank flags an additional $374 million for customer remediation costs

Picture: Getty Images
  • ANZ says it will need to book further charges of $374 million due to the problems in its wealth management division.
  • The amount is made up of customer refunds as well as remediation costs, following internal reviews which the bank says are ongoing.
  • ANZ also said it will book legal fees expenses of $55 million related to the financial services royal commission.

ANZ has warned that it will need to book an additional expense charge of $374 million, stemming from problems in its financial planning and wealth management divisions.

Of that amount, around 57% related to customer refunds, with the remaining balance allocated to remediation costs.

The bank also said that two-thirds of the total expenses will be incurred by current divisions in the bank, while the other 34% relates to discontinued operations.

ANZ completed the sale of its wealth management arm to IOOF earlier this month.

The expense charges “relate to issues that have been identified from reviews to date. These reviews remain ongoing,” ANZ said.

Earlier this year, internal reviews by the bank showed instances of incorrect advice by ANZ financial planners ran into the thousands.

In total, the bank said it will book additional customer remediation costs of $247 million in the second half of the year, up from $48 million in H1. ANZ has a financial year-end of September 30.

The costs relating to ANZ’s former wealth management arm will amount to $127 million.

ANZ also said it will incur legal fees related to the banking royal commission of $55 million, in line with the bank’s April forecast of a $50 million charge.

The bank also flagged further costs relating to accelerated amortisation of software and restructuring fees.

ANZ shares fell by around 1.7% in early trade. Commonwealth Bank and Westpac had smaller falls of around 0.5% while NAB was also more than 1% lower.

Here’s a summary of the bank’s additional H2 charges for continuing operations:

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.