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Australian lender ANZ Group has been sanctioned for continuous breach of code obligations after failing to stop or refund fees for dead customers and not responding to their representatives within the stipulated time frame, an investigation have revealed.

ANZ came under scrutiny after the Banking Code Compliance Committee (BCCC) submitted the "Deceased Estates Report," which inquired into practice by Australian banks on managing the estates of deceased customers, in 2023.

The BCCC investigation revealed that ANZ had not complied with the Banking Code of Practice between July 2019 and September 2023, Broker News reported.

ANZ failed to stop or refund fees charged to deceased estates after customers' deaths, and did not respond to representatives of the deceased customers within the stipulated 14 days.

Acknowledging BCCC's findings, ANZ general manager customer service operations Dan O'Neill said the bank's customers, their families and their representatives should "rightly expect compassionate and timely support from ANZ".

"We know we have not always met the expectations of our customers and their families at a difficult time in their lives," O'Neill said.

As a remedial action, ANZ is expected to pay nearly AU$3.3 million to 18,852 estates. The amount includes the "time value of money" payments of AU$391,486, which is compensating for the period when the estates could not use the funds. ANZ will pay a compensation of AU$667,915 to estates that waited more than 90 days for the bank to act.

The group stated it will issue 10,604 apology letters to the impacted representatives and families of their deceased customers.

BCCC chair Ian Govey AM stated the breaches were "systemic in nature," adding that non-compliance by the bank warranted serious sanction. "Naming a bank is a sanction that we reserve for the most serious and systemic breaches," Govey said.

The bank had identified the code beaches in early 2022; however, ANZ took nearly two years to initiate the remediation program, Reuters reported.

The customer remedial program is expected to be finalized by July end.

The bank stated it has launched a dedicated program that includes updating the technology and processes to better the service for the representatives of the deceased customers and "significantly" worked on improving the response time.