ANZ Bank will soon refund $10.2 million to small business credit card users after failing to properly disclose fees for one of its products, in what one banking expert says is a reminder to SMEs to pay close attention to all charges that appear on their credit card statements.
The mishap relates to holders of ANZ Business One credit cards. The corporate regulator said on Wednesday that ANZ had informed it that from as far back as 2009, the bank had failed to disclose, or incorrectly disclosed, information to these businesses about applicable interest rates, interest-free periods, annual fees and overseas transaction fees.
More than 52,000 businesses use the Business One credit card program, many of which ASIC said are small businesses. Eligible businesses will be contacted by ANZ to organise a refund to their bank account, and former customers will be sent a bank cheque. ANZ has since updated the information provided to prospective Business One customers.
The disclosure from ANZ comes just days before the royal commission into banks, superannuation and financial services is set to commence.
A spokesperson for ANZ told SmartCompany some of the “inconsistencies” identified in this case came about because letters had not been updated to reflect new interest rates or fees.
“These were caused by breakdowns in process and human error and we apologise for the inconvenience we know this will have caused our customers,” the spokesperson said.
“ANZ has since rectified the inconsistencies in its letters of offer for both new and existing customers. We have also introduced a new quality assurance and control process.”
Independent banking expert Neil Slonim says small business operators rarely cross-check the fees they are charged when using credit cards, which can lead to issues down the road.
“They don’t have the time and they often lack the financial literacy to understand what can be a confusing range of fees and ways in which fees are calculated,” he tells SmartCompany.
Slonim observes that, like consumers, businesses can also fall victim to late fees, penalties and dishonour fees. Fees calculated by percentage rates, instead of flat rates, can also cause confusion.
On the bright side, Slonim believes ANZ’s decision to report this error to ASIC demonstrates a shift in proactive behaviour from financial institutions in light of greater public scrutiny, such as through the royal banking commission.
“The situation is changing reasonably quickly as a result of two things: one is the increased scrutiny coming from the regulators, the second is an acknowledgment from the banks that they have to do better,” he says.
“In the past, situations like this probably took place but were never identified. Banks are now much more open, in that if they uncover something untoward, they will proactively address the situation.”
In the event of uncertainty, Slonim advises small businesses to consult their bank over any credit card charges. If operators feel uncomfortable doing so, they should consult external experts but the bank should always be the first port of call.
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