ANZ Bank has revealed it will pay $30 million in compensation to thousands of financial advice customers who paid for financial advice but did not receive all the services they were promised, re-igniting calls for a royal commission into the sector.
Ahead of a high-stakes hearing at which big bank chiefs will be questioned next week, ANZ on Thursday said it expected to compensate about 8500 customers after the bank failed to provide a documented annual review for clients who had purchased a package of wealth services.
It also revealed it had dismissed two advisors and reported them to the corporate watchdog.
ANZ on Thursday said it expected to compensate about 8500 customers after the bank failed to provide them with a documented annual review. Photo: Bloomberg
The ANZ wealth package, known as Prime Access, was meant to give customers priority access to financial planners, investment monitoring alerts, and a documented annual review.
But ANZ did not provide the review to all customers between 2003 and 2013, and has started a compensation program led by external consultants from PwC and law firm Clayton Utz.
While critics said it was further evidence of systemic problems in the financial advice sector, the chief executive officer of ANZ's global wealth division, Joyce Phillips, said the problems did not relate to quality of advice.
"We're pretty comfortable, we did not find any systemic issues relating to advice quality," Ms Phillips said in an interview with Fairfax Media. Instead, she said the issue was the bank had not complied with its contractual obligations to customers.
As part of its file review into the problems, ANZ has also dismissed two advisors and reported this to the corporate regulator, but Ms Phillips this did not relate to quality of advice, either.
"In our review process we have reported just a couple of instances where we are further investigating individuals, but again, nothing systemic to do with quality of advice."
It comes as the Australian Securities and Investments Commission is investigating some of the big four banks, Macquarie Group and AMP for charging clients for financial advice even when the advice was not provided. Aside from ANZ, the Commonwealth Bank of Australia has also been affected by the ASIC investigation.
A CBA spokeswoman said the bank's financial planning division (CFPL) had told ASIC about the issue last year and it was working to reimburse customers.
"We acknowledge ASIC's announcement today that it is investigating financial advisers charging service fees where service was not provided," the spokeswoman said.
CBA would not say how many customers had been affected or the amount of money involved.
ANZ said it had also reported the issue to ASIC, and it had confirmed "irregularities" in customer files last year.
National Australia Bank, Westpac, and Macquarie did not comment and AMP said it had not received formal notification of the ASIC investigation.
The episode follows advice scandals at CBA and NAB, and was seized on by senators who want a royal commission into the industry.
The Nationals' John Williams said the latest revelation at ANZ was disappointing and raised questions about how widespread the industry's problems were.
"Each week we hear more and more evidence of wrong-doing. It's unbelievable," he said. "It adds weight to a royal commission."
Labor senator Sam Dastyari said the statement by ANZ on Thursday was undoubtedly prompted by the work of the Senate economics committee which he is chairing. The committee is conducting public hearings in Canberra next Tuesday afternoon where senior bank bosses have been called in to answer questions on recent financial advice scandals.
"This disclosure [by ANZ] is a result of the public scrutiny being put on the banks," Senator Dastyari said.
The revelations that 8500 ANZ clients have been compensated may increase the pressure on ANZ chief executive Mike Smith to attend the hearing next Tuesday.
Commonwealth Bank chief Ian Narev, National Australia Bank chief Andrew Thorburn and Macquarie Group chief Nicholas Moore are all attending, however ANZ told the committee it would send deputy chief executive Graham Hodges, along with Joyce Phillips, the head of wealth.
Greens Senator Peter Whish-Wilson also argued that it was only the pressure of public inquiries that the "systemic" problems in advice had been revealed.
"Imagine what might be exposed if a Royal Commission was established and given powers to investigate the sector properly.
ASIC deputy chairman Peter Kell said it would consider enforcement action as part of its review, and would make sure customers were properly compensated.
"ASIC will consider all regulatory options, including enforcement action, where we find evidence of breaches of the law relating to fees being charged where no advice service has been provided," Mr Kell said in a statement.
Mr Kell made the comments in an update on a project that has been investigating the wealth arms of the Commonwealth Bank, National Australia Bank, ANZ, Macquarie Group and AMP.with James EyersAuthor: Clancy Yeates
Source: Sydney Morning Herald
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