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ANZ Bank will pay out $7 million in a proposed settlement of a
long-running legal case over faulty loan documents for which the bank said
yesterday it was ``deeply embarrassed".
About 6000 ANZ customers across five states lost money because of mistakes in
personal loans written between 1985 and 1996.
Close to 70 per cent of loans written in that time were said to contain
mistakes, ranging from incorrect dates to errors in interest rates, fees and
credit insurance.
``Our behaviour during that period from 1985 to 1996 was clearly
unacceptable, and to add to that, the way we have undertaken to resolve some
issues has not been in the best interests of the customer," an ANZ spokesman
said yesterday. The bank was ``deeply embarrassed" to have been found in breach
of credit regulations, he said.
A national settlement lodged with a Victorian tribunal yesterday, and
endorsed by Consumer Affairs Victoria, comprised $5.25 million in fines to be
distributed to consumer legal funds in each state. Another $1.65 million in
compensation is to be paid to 6000 identified customers.
However the Victorian Civil and Administrative Tribunal, which has the power
to vary the deal, has reserved its judgement until next week.
The NSW Department of Fair Trading said its lawyers were also examining the
settlement, which must be separately ratified by the NSW consumer tribunal.
David Niven, of the legal firm Maurice Blackburn Cashman, which represented
more than 700 ANZ customers, described the proposed settlement as one of the
biggest in a hearing of this type relating to the credit act.
The ANZ spokesman said the bank had recently endeavoured to work with
consumer groups, and would accept the tribunal's decision.
In March, ANZ said it accepted responsibility for the errors, which it blamed
on poor procedures and inadequate staff training.
``To have to wait 17 years for compensation is not something we'd like to see
repeated," the Australian Consumers' Association finance policy officer,
Catherine Wolthuizen, said.
``It is not acceptable there were errors in information and the terms of
loans, but the bank is now doing the right thing."
The NSW Consumer Credit Legal Centre welcomed the proposed settlement as
``good news".
ANZ said 360,000 personal loans were written from 1985 to 1996, but not all
errors resulted in financial loss for customers.
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