ANZ PUT THEIR CARDS ON THE TABLE
- Written by Melanie Toye, February 2, 2014
ANZ Australia CEO Phil Chronican puts his cards on the table and tells of the interest rate offset error that has caused the bank $70 million in pay outs to more than 235,000 customers. Plus additional costs from employee hours spent to fix the problem.
The offset error goes back, in some cases, over a ten year account span. The interest rates were processed incorrectly and affected the customer's mortgage offset accounts.
What has Chronican done to fix the problem?
He apologised to all of the customers affected. He has advised the payout should cover the value their customer would have got if not for the error. And he has put into place new automated controls to ensure accounts have been set up correctly, ensuring the issue will not happen again.
I hear you ask, if this major bundle of error happened to ANZ customers, what about the rest of the banking world in Australia?
In 2013, the Bank of Queensland (BOQ) refunded nearly $34.5 million to their customers after interest rate glitches arose with their offset accounts.
Hopefully all banks will follow ANZ's and BOQ hard, lengthy and costly lesson. To review and check all of their products and accounts are being formulated correctly to avoid any embarrassment down the line and a massive payout.
If the banks in question had refused to take appropriate action, the Australian Securities and Investments Commision (ASIC) would look to give the bank a penalty. Because ANZ has remedied the action, no penalty or fine from ASIC will be given.
Another great decision by the Reserve Bank of Australia Board that all Australian home owners will be cheering about. On 2 September, the Board decided to leave the cash rate unchanged at 2.5 per cent.
This gives mortgage owners a chance to continue to add additional money into their mortgage without the funds being chewed up by high interest charges.
And because of this, mortgages will be paid out much quicker. In some cases, if a mortgage owner adds an additional $200 a week into their mortgage. They might be able to chop five years, off their total loan amount. Can you imagine not paying a mortgage repayment anymore? Well, if you pay extra in your mortgage while taking advantage of the low interest rates, you could be living without a mortgage much sooner than you except.
The things you could do with that extra money. Maybe even put it towards a holiday home, or investment property, or building your super, or just taking a wonderful holiday somewhere.
Sooner or later, interest rates will climb again. There is no doubt about that. So taking full advantage of the low interest rates now, is in your favour.
Pending on who your mortgage is with, you might be able to put the additional payments into a redraw facility, in case down the track you need to use it for an emergency.
Some mortgage owners put their additional funds into a savings account to earn interest. But say $5,000 in savings a year, you earn $100 in interest and then taxed from the interest you earned. Would it be more for your end pocket if your savings were put against your mortgage?
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- Saving initiatives for first home buyers - February 28, 2014
- ANZ put their cards on the table - February 2, 2014
- Fixed-rate mortgages are the trend - January 10, 2014
- Always be diligent with your research - November 8, 2013
- Lowest interest rates ever yet mortgage stres.. - October 26, 2013
- More mortgages lodged in 2013 - October 19, 2013
- Selling and your mortgage - October 11, 2013
- September records show a rise - October 4, 2013
- Reserve rates hit record low - August 11, 2013