ANZ to pay $3m after reviews probe

ANZ has succumbed to tougher rules in its wealth business, after failing to provide annual reviews to over 10,000 customers.

ANZ’s Alexis George acknowledges the bank failed to meet customers’ expectations.

ANZ has succumbed to tougher rules and regulation in its wealth management business, as the corporate watchdog slaps the bank with an enforceable undertaking just days ahead of royal commission hearings into its financial advice division.

The nation’s third largest bank has been forced to pay $3 million as part of remediation which has already cost the bank almost $50m in refunds for charging fees to financial advice customers where no service was actually given.

Kenneth Hayne’s royal commission will be grilling ANZ’s financial planners from RI Advice Group and Millennium 3 about dodgy financial advice and poor conduct by the advisers.

The Australian Securities & Investments Commission today said it had accepted an enforceable undertaking from ANZ after an investigation found the bank failed to provide documented annual reviews to more than 10,000 of its “prime access” customers over seven years through 2013.

The undertaking — an alternative to civil or administrative action where there has been a breach of regulations — will see ANZ make a community benefit payment of $3m. It will also require an audited confirmation from senior management that since 2014 the bank has complied with documenting annual reviews to customers entitled to them. Senior ANZ managers will also be forced to confirm they have improved the lender’s compliance systems and processes.

“We acknowledge we did not meet customers’ expectations by not providing them the services we promised,” ANZ wealth boss Alexis George said. “We have since introduced measures to prevent this from happening again and have largely completed making remediation payments to impacted clients,” she said.

ANZ has already paid almost $47 million in compensation for the breach, in which it charged customers for annual reviews they weren’t even receiving. ANZ was aware of the breach as early as 2008, but the lender ignored the error until 2013, when it told ASIC of the breach in August that year.

Yesterday, new ASIC boss James Shipton said banks needed to improve the speed with which they reported legal breaches. The Hayne royal commission has revealed lenders fail to comply with the requirement to notify ASIC within 10 days of discovering a breach.

ASIC deputy chair Peter Kell said it was “critically important” ANZ overhaul its systems to ensure the breach of trust did not happen again. “This enforceable undertaking with ANZ will deliver on that commitment,” he said.

AMP, ANZ, Commonwealth Bank, National Australia Bank and Westpac have now paid an estimated $220 million in refunds and interest for failing to provide general or personal advice to customers while charging them ongoing advice fees. The investigation revealed more than 27,000 customers were stiffed by the breaches.

The financial services royal commission has drawn up an extensive list of agenda items for its second round of public hearings on financial advice and all the major banks and AMP are to face questioning by the royal commission’s star counsel assisting Rowena Orr.

The hearings, to be held from April 16 to 27, will consider: the conduct of financial services entities that provide financial advice to consumers; compliance with the law and community standards; and the adequacy of the current legal and regulatory structure.

National Australia Bank and ANZ Bank, along with its Millenium3-aligned adviser group, which was sold last year to IOOF, will be probed on improper conduct by financial advisers.