Fair and responsible banking: improving outcomes for customers
ANZ remains focused on improving customer outcomes and making changes to governance, culture and remuneration to support that goal.
While many of the actions we have taken to improve customer outcomes, including in relation to remediation, commenced prior to The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the release of Commissioner Hayne’s final report and its subsequent recommendations for change has led us to further examine how we serve our customers and run the bank.
Reducing the time taken to refund customers when we fail
Recognising that we have failed our customers by taking too long to identify and fix issues, in 2017 we introduced customer remediation principles to guide our work to fix systemic errors and refund impacted customers more quickly.
We are committed to ensuring the approach we take to remediation is fair, responsible and efficient for our customers. This approach, together with an increase in resources and infrastructure, is reducing the time taken to pay customers back – in some cases cutting the time to make the first customer payment by more than 50 per cent.
We are currently resolving issues with over 2.6 million retail and commercial customer accounts. At the end of March 2019, we had successfully made remediation payments to approximately 420,000 customer accounts.
Our retail and commerical Responsible Banking team is a centralised group dedicated to undertaking this work. The size of this team has increased in the past year from 130 people to over 200. In addition to working on complex remediations, the team provides guidance, support and infrastructure to over 300 people working on smaller remediations, initial investigation and issue resolution.
A common process and governance framework has been developed to guide the team. In addition, ANZ is continually improving data capabilities to more readily source information, such as customer and account details to enable us to refund customers more quickly.
We recognise the importance of learning from our remediations to prevent similar issues from reoccurring. ANZ is also delivering a customer remediation education program focused on remediation prevention, education and lessons learnt.
Alerts on significant remediations have also started to be issued to senior leaders across Australia division. This is done to highlight the impacts on customers when we fail.
Unapplied funds customer remediation
ANZ retained credit balances in some accounts that were, or should have been, closed. This affected a number of products, including some loan accounts and various credit and debit card accounts.
In the case of some loan accounts, this occurred where the customer repaid an amount greater than what was required to repay the loan in full. In the case of card accounts, this occurred where an account was closed, but credit transactions were not automatically rejected.
Customer impacts
ANZ will be returning approximately $A41 million in credit balances (plus additional compensation) to approximately 425,000 customer accounts.
Repayments to customers have commenced, with payments of approximately $A1.8 million made to approximately 70,600 accounts. A further 200,000 accounts are targeted to be refunded by the end of September 2019.
Actively monitored ‘fixes’ are now in place for personal loans and commercial loans and solutions are also in place for all other card related products.
Wealth customer remediation
More than 120 people are working in the Wealth remediation team under a framework, updated and provided to the Australian Securities and Investments Commission (ASIC) every six months.
Key remediations are:
Inappropriate advice review
We are reviewing the advice of financial planners who were reported to ASIC as either being subject to Serious Compliance Concerns, or Other Compliance Concerns. The Serious Compliance Concern notification identified the conduct of 39 advisers during the period 1 January 2009 to 30 June 2015 while employed with or authorised by the ANZ group.
Since late 2016, over 8,000 case files have been assessed with financial detriment identified in 1,770 cases (around 22 per cent of cases). To date, payments offered to customers totals more than $A27 million.
We expect that this remediation will take until mid-2020 to complete.
Fees for no service review - salaried planners through ANZ Financial Planning
We are reviewing the fees charged for service delivery to Prime Access customers in the ANZ Financial Planning business. Significant progress has been made to remediate customers for not receiving the services they paid for. Around 10,000 customers have been compensated an amount totalling more than $A46 million.
Fees for no service review - aligned planners, licensees now owned by IOOF (ex-ANZ)
This remediation will commence following the approval of our methodology by ASIC. We anticipate that customers will be refunded throughout 2020 and 2021.
Changes to retail remuneration
ANZ supports the findings and recommendations of Stephen Sedgwick’s ‘Retail Banking Remuneration Review’ and is on track to implement all recommendations ahead of the 2020 deadline.
Since the end of 2018, we have removed individual financial targets for generalist bankers within our branches. Customer referrals have also been removed as a measure of bank tellers’ performance, with a broader range of customer service measures introduced.
ANZ is redesigning how we manage and reward our people to better focus on the interests of our customers, the long-term health of the bank and team outcomes. As part of this work we are improving our processes for documenting accountability considerations in the staff performance and remuneration review process.