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ANZ Banking Group (ASX: ANZ) has agreed to pay out a total of $99 million to settle two separate legacy class actions involving superannuation products from its former OnePath Custodian division and commissions paid to car dealers by its former Esanda finance arm.
The Esanda settlement accounts for the biggest share of the settlement at $85 million and represents one of three “flex commission” class actions that have also caught out Westpac Banking Corporation (ASX: WBC), including its St George Finance subsidiary, and Macquarie Leasing in relation to consumer car loans.
The Esanda class action is a legacy issue for ANZ which sold its Esanda Dealer Finance portfolio to Macquarie Group (ASX: MQG) for $8.2 billion in 2016.
The ANZ class action related to the use of flex commissions in dealer arranged Esanda car loans between 1 January 2011 to 31 March 2016.
Flex commissions, which were banned by the Australian Securities and Investments Commission in 2018, allowed car dealers to set the interest rate and loan term on car loans. Higher interest rates and longer loan terms led to higher commissions received by the dealer.
All three class actions involving ANZ, Westpac and Macquarie were to be heard in a joint trial scheduled to start on 14 October 2024 in the Victorian Supreme Court.
Legal firm Maurice Blackburn has confirmed that the trial against Westpac, its St George Finance subsidiary and Macquarie Leasing is scheduled to proceed later this month.
Maurice Blackburn’s national head of class actions Rebecca Gilsenan says the ANZ settlement is “an historic win for consumers who had paid far too much for their car loans”.
“We are very pleased to have achieved this result for consumers,” she says.
“They had a right to expect that dealers were offering the best rate because they understand the roles of car dealers and lenders are distinct. We acknowledge that ANZ has now put this right for customers.”
Meanwhile, ANZ says it also has agreed to pay $14 million as part of its share of a $50 million settlement in relation to the OnePath Custodians and OnePath Life superannuation.
Insignia Financial (ASX: IFL), which now owns OnePath Custodians, will contribute $22 million towards this settlement. OnePath life insurance is now part of the Zurich Insurance Group.
The class action, which involved the former OnePath Master Fund and Retirement Portfolio Service, relates to interest rates paid on members’ investments in cash investment options before January 2020 and the payment of grandfathered commissions to financial advisers before April 2019.
Legal firm Slater and Gordon, which brought the class action in 2020, says that OnePath Custodians “breached its duties as trustee by investing members’ superannuation funds in cash investment options with its parent company ANZ, at rates for members that were lower than those offered to other depositors with no ties to ANZ”.
The firm also alleged that OnePath allowed members to be charged “excessive fees” to pay commissions to financial advisers that resulted in no additional benefit to members.
ANZ says both settlements have been made “without admission of liability” and each remains subject to court approval.
Insignia says the settlement will be expensed in the first half of 2025 and excluded from its underlying net profit after tax.
Slater and Gordon says that the settlement secured from the class action is the third in its Get Your Super Back campaign in response to the 2018 Banking Royal Commission.
The law firm’s practice group leader Kirsten Morrison says the settlement will mean that “thousands of Australians would now be eligible for compensation”.
“It also demonstrates the importance of the class action regime, which has enabled two lead applicants to represent thousands of other group members who otherwise may not have known about these issues,” she says.
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