ANZ will have to compensate two million customers who have been over charged or ripped off in some way, the financial services royal commission has heard.

CEO Shayne Elliott told the commission on Wednesday that “if we look at all remediations that are underway, the total number of accounts affected is approaching two million”.

Some of these customers had been remediated already and some would be double counted because they had been hit by more than one legal breach, but overall Mr Elliott said compensation would total “in the hundreds of millions of dollars”.

The commission heard that ANZ had already missed two deadlines – to rebate trail commissions to about 6000 customers, and to reimburse adviser services fees incorrectly deducted from the accounts of about 3000 customers.

Reimbursement for account errors had also fallen behind and deadlines for remediation of all these issues by mid-July had not been met.

Mr Elliot said the remediations would be paid by early next year. Despite falling behind, he insisted ANZ was “on track” with the issue.

ANZ was also shown to be a laggard among an Australian banking system that was woefully slow in reporting legal breaches to regulators and remediating customers. Counsel assistant Rowena Orr quoted from an ASIC report that found Australian banks had taken an average of 1517 days, or over four years, to identify and report legal breaches in dealings with customers.

ANZ ‘s average was also 1517 days and Mr Elliott acknowledged that “it’s clearly unacceptable and it’s not right”.

The commission also heard banks took an average of 150 days after beginning investigations to lodge a breach report with regulators when the Corporations Act demanded this happen within 10 days.

Ms Orr pointed out that ANZ was “an outlier” here as well. ANZ took an average of 198 days while CBA took 104 days, NAB 139 days, Westpac 165 days and AMP 69 days.

Mr Elliott said the bank had waited until it knew the full extent of the misconduct in the past before beginning remediation. From now on the bank had committed itself to remediating “in tranches” as it investigates, he said.

ANZ has closed 110 branches in the last decade with the speed of closures seemingly increasing. Mr Elliott said in the current calendar year the bank had closed about 35 branches and last year the figure had been between 30 and 50.

The figures were gross and did not include new branch openings. But there was increasing pressure on branches and those that were closed had experienced a decline in patronage of about 20 per cent to 30 per cent, he said.

“What do people do in branches? Much of it is related to cash, either deposits or withdrawals. So what we’re seeing is a significant fundamental in traffic in our shops, if you will.

“So, essentially, we are confronted with a dilemma where we have shops and a distribution network with less and less people in it, and, therefore, at some point they become uneconomic.”

Increased use of internet banking and mortgage brokers meant that only 33 per cent of mortgages were now sourced in branches with the others going through mortgage brokers or mobile bankers who came to the client, he said.

The bank was in the process of developing systems that would not allow people to use credit cards for gaming payments of their limits were more than 85 per cent drawn down, he said.