ANZ will suspend sales of its secured personal loans for cars, boats and
caravans, both directly and through its broker channels, as it undertakes a
detailed review of the business.
The announcement comes after Australia's fourth largest bank was ordered to
pay $10 million to cover hundreds of cases of loan fraud written by Esanda,
a finance company it owned until 2015.
The review will determine if it's still worth competing in the market due
to increasing technology costs, says Catriona Noble, managing director of
ANZ's retail distribution.
"[It] represents less than one percent of revenue within our broader Australian
business, so we need to assess if it is better for our customers,
shareholders and employees if we focus our investment on areas of our
business that are core to what we do," she says.
Secured personal loans hold the car, boat or caravan as security, so that
they can be sold to recover debts in the event the borrower defaults on the
The move to suspend sales comes days before ANZ will face questioning
before the banking royal commission on its issuing of 320 fraudulent car
loans, which were written by its then subsidiary.
The Australian Securities and Investment Commission (ASIC) took Federal
Court action against ANZ over 12 of the 320 loans, claiming ANZ failed to
meet its own responsible lending obligations.
The loans, sold to customers by Esanda for two years until 2015, were
likely based on fudged paperwork and fraudulent payslips, the corporate
A $5 million settlement was agreed for contravening 24 provisions of the
credit code, and another $5 million is to be refunded.
ANZ will pause sales of secured personal loans from 30 April until 30
September 2018, which is when it expects to complete its review.
The bank will continue to support its existing secured loans and sell them to businesses.