Merrick bank will pay $1.5m to victims, with another $2m to come in the next two months, after it admitted it had misled investors about the state of its bank.

Key points:The Australian Securities and Investments Commission (ASIC) has said the bank should have reported a “material” breach in May 2017When the bank reported a serious breach in November 2016, it paid $2 million to affected customersIt was the third time the bank had failed to meet a legal requirement in a decade and it will pay the victims $1m to cover any damages they have suffered.

The bank admitted it should have flagged a breach in April 2017, before it received a warning from ASIC in May.

The commission’s director of enforcement, David Jones, said the latest settlement “will go some way to ensuring that the bank’s actions do not happen again”.

“The regulator has taken action in this matter and it is our view that the remedial actions announced today will help prevent this from happening again,” he said.

“The settlement also includes an $800,000 financial assistance scheme that is available to the bank and will be funded by the Commonwealth.”

Mr Jones said the commission was also seeking to resolve claims for breach of fiduciary duty and breach of confidence.

The ACCC had earlier warned the bank to “do more” to improve its compliance with the Australian Securities Exchange (ASX) rules.

“We have not found any evidence to indicate that the breach was material,” Mr Jones said.

The regulator said the $1 million to cover losses it had suffered since March 2017 was “reasonable” and “slightly less than the maximum amount of money the bank could have been liable for”.

“If this was the case, it would have been a reasonable amount of compensation to cover the financial losses that have been incurred,” he added.