Its decision to scrap bonuses comes after it was revealed in the Royal Commission into banking, superannuation and financial planning that 5% of the bank’s financial planning product sales were deemed inappropriate by Australian regulators.
It will remove all sales incentives for bonuses and only assess performance on customer satisfaction, ANZ values, and risk and compliance standards.
In a statement, that did not reference the Royal Commission, ANZ chief executive Shayne Elliot said: “We know it has taken too long for changes to occur, so where we see solutions we will act.
“That is why we are getting on with these initiatives now,” Elliot said.
By comparison, the UK banned commission-based advice by financial advisers in 2013 following the Retail Distribution Review (RDR).
Further initiatives
In addition to removing bonuses, ANZ said it would bring in initiatives that will:
- Quickly identify and remove planners that provide inappropriate advice – two audit fails and their contract will be terminated.
- Only employ new planners with a relevant undergraduate degree and industry certification, and require existing planners to be enrolled in further necessary training by January 2019.
- Commit to completing compensation on about 9,000 current inappropriate advice cases by the end of the year.
- Offer a free advice review for any of its financial planning customers who may have concerns about their current financial position.
Reducing exposure
Several of Australia’s major lenders have announced they plan to reduce their exposure to the financial planning industry.
ANZ plans to sell most of its planning business to IOOF Holdings, while the National Australia Bank (NAB), announced earlier this month it would exit its wealth management business by the end of 2019.
Royal Commission
The Royal Commission is set to significantly change the Australian financial services landscape, as damning revelations continue to emerge about the treatment of customers by nation’s major lenders.
Michael McCarthy, chief strategist at UK-based financial derivatives trader CMC Markets, told Reuters: “The world of financial services, particularly for individuals, will look very, very different in two years’ time”.
“The Royal Commission is playing a key part in it.”
