The Federal Court of Australia (FCA) has approved the settlement between ANZ and the Australian Securities and Investments Commission (ASIC) over periodical payment fees.

The Australian lender has agreed to pay ASIC A$10m ($7.14m) in penalty for incorrectly charging periodical payment fees to its customers, before February 2016.

The bank also agreed to pay an additional $1m towards costs incurred by the watchdog ASIC.

ASIC found out that the bank charged customers fees for periodic payments between August 2003 and September 2015.

These include the fees charged for periodic payments that could not be made due to insufficient funds in the customer’s account and transaction fees charged for successful periodic payments.

However, the bank was not supposed to charge fees for transfers from one account to another, under the same customer’s name.

ANZ had received red flags regarding these charges back in July 2011, however, the lender continued to charge its customers incorrectly.

These unlawful charges affected as many as 69,000 bank customers, and the charges amounted to A$3.1m ($2.21m) in approximately 175,000 unfair fees.

ANZ has conducted a remediation programme, through which the lender repaid A$2.5m to some of its customers.

However, the bank is yet to pay A$637,901 to the remaining affected customers – which has been or will be paid to ASIC as unclaimed money or to charity.

ASIC deputy chair Daniel Crennan said: “The outcome and penalty imposed by the Court is a strong deterrent message and reflects ASIC’s position that ANZ lacked contractual entitlement to charge these particular fees. ASIC, through its Office of Enforcement, has held ANZ to account for this conduct.

“ASIC acknowledges the cooperative approach taken by ANZ to this litigation, which allowed the matter to be efficiently resolved by the Court. It is in the public interest that parties to regulatory litigation cooperate where possible.”

ANZ has admitted to more than six contraventions with respect to 327,895 occasions, by charging “same-name” fees to affected customers.

Recently, Westpac agreed to pay a fine of A$1.3bn for violating anti-money laundering rules. This is said to be the largest ever penalty in Australian corporate history.