ANZ (ASX: ANZ) has today revealed how customer remediation efforts are costing the bank big bucks.
The company says its second half 2019 cash profit will be impacted by a charge of $559 million (after-tax) as a result of increased provisions for customer related remediation.
The $559 million in expected charges plus the $123 million incurred during 1H19 bring the total estimated customer remediation cost for FY19 to $682 million.
The charges can be broken down to $405 million after-tax, largely related to product reviews in Australia Retail & Commercial for fee and interest calculated matters.
These include historical issues recently identified during 2H19, as well as refinements to estimates of existing customer compensation programs and costs.
The remaining $154 million relate to discontinued operations primarily related to the advice remediation program and customer compensation charges for other Wealth products.
"We recognise the impact this has had on both customers and shareholders," says ANZ CFO Michelle Jablko.
"We are well progressed in fixing issues and have a dedicated team of more than 500 specialists working hard to get any money owed back to customers as quickly as possible."
ANZ's charges follow National Australia Bank's (ASX: NAB) $1.19 billion hit earlier this month.
The extra $1.9 billion takes NAB's total remediation provisions to almost $2.1 billion as the bank seeks to rectify its reputation in the wake of the Royal Commission into the banking and financial services sector.
The money will be put aside for potential customer refunds of adviser service fees paid to self-employed advisers.
Shares in ANZ are up 0.59 per cent to $27.46 per share at 10.29am AEDT.
Business News Australia