SYDNEY (Reuters) - Australia and New Zealand Banking Group (ANZ.AX) has behaved inappropriately when dealing with a number of indigenous clients, a powerful misconduct inquiry into the country’s financial sector heard on Friday.
Halfway through a year of scheduled hearings, the inquiry has already led to damaging revelations of careless and at times fraudulent lending practices, wiping out tens of billions of dollars from Australian bank valuations, spurring major asset sales and leading to executive departures.
This week, the inquiry or Royal Commission has turned the spotlight on the financial exclusion of indigenous customers who struggle to get access to basic banking facilities or end up with unsuitable products amid predatory sales practices.
Rowena Orr, the barrister assisting the Commission, said ANZ had breached the banking code when its staff refused to open a low-fees bank account for an aboriginal customer on social benefits, despite being eligible.
“ANZ failed to appropriately train its staff who were regularly dealing with Aboriginal and Torres Strait Islander customers to be culturally aware ... those matters invoke available findings of misconduct,” she said.
Financial services firms should consider efforts to promote inclusion of customers in remote communities, which account for about 3 percent of Australia’s population, Orr added.
An ANZ spokesman declined to comment and said the bank would “make the appropriate submissions to the Royal Commission”.
Earlier this week, Australia’s corporate watchdog called for a ban on debit card overdraft services for indigenous customers, saying their poor understanding of fees left them paying high amounts for basic banking services.
An executive from the watchdog also pointed out at the time to the inquiry how some financial companies took advantage of cultural differences, such as the importance of funeral services in Aboriginal culture, to sell funeral and life insurance plans.
About half of funeral insurance plans in remote indigenous communities are sold to people 20 years old or younger.
Funeral insurer Aboriginal Community Benefit Fund (ACBF) is a case in point, the inquiry heard on Friday.
ACBF, in its dealings with the aboriginal community, has breached laws that carry criminal charges, Orr said.
“Does the current regulatory framework deal adequately with the potential for people with funeral insurance policies to pay more in premiums than may ever be paid out? And should the current regulatory framework be modified to include protections for holders of funeral insurance?” Orr asked the floor.
Reporting by Paulina Duran; Editing by Himani Sarkar