ANZ will no longer factor in sales incentives while calculating bonuses for its financial planners and boot them out if they fail an audit twice, the bank announced today.
As ANZ attempts to revive its advice business after Royal Commission hearings and ahead of IOOF acquisition, chief executive Shayne Elliott admitted the bank had failed some of its financial advice customers.
“We know it has taken too long for changes to occur, so where we see solutions we will act. That’s why we are getting on with these initiatives now,” he said.
On April 23, it was revealed ANZ kept a “leaderboard” that ranked advisers on the revenue they brought in.
It changed its revenue-centric adviser remuneration on April 12 – less than two weeks before the RC’s questioning of ANZ chief risk officer and head of digital and wealth Australia, Kylie Rixon. The bank then limited revenue-based measures to only 15% of compensation criteria and abolished the leader board, Rixon said.
Today, ANZ said it has removed all sales incentives for bonuses and will now only asses performance on customer satisfaction, risk and compliance standards and ANZ values.
To keep its adviser pool clean of inappropriate planners, ANZ is promising to boot out planners if they fail an audit twice.
It is also placing higher expectations on the qualifications of its advice professionals after last month, senior counsel assisting Rowena Orr revealed that only 35% of all financial advisers have completed a bachelor degree or above.
Financial planners looking to work with ANZ will now need to have a relevant undergraduate degree and industry certification.
The bank said it will push existing planners to enrol in further training by January, 2019.
ANZ is promising to compensate 9000 clients who received unappropriated advice from ANZ professional, by the end of the year.
Earlier last month, ANZ footed a $50 million bill in compensating its fee-for-no-service bungle for its Prime Access Clients, also copping an enforceable undertaking from ASIC.
At the time, ASIC said the compensation program was “nearing completion”.
ANZ anticipates $50 million in legal costs stemming from the Royal Commission for the year ending September , it revealed in an earnings report.
The bank’s wealth business is set to be acquired by IOOF.
On April 24, IOOF announced that it has cleared all regulatory hurdles in acquiring OnePath’s pension and investments and four aligned dealer groups.
The deal was announced in September 2017 and at the time IOOF would pay about $975 million.
On May 2, Financial Standard reported that IOOF had updated the market on ANZ’s 1H18 financial results, ahead of the acquisition.
ANZ’s 1H18 results reveal that cash profits in its wealth division slid by 24% to $44 million. ANZ said this was because of a non-recurring lenders mortgage reinsurance profit share being included in the 1H17 results, strengthening of claims provisioning in 1H18 and lower new business volumes in ANZ Financial Planning.
The bank is also offering a no-cost advice review to all its financial planning customers who “may have concerns about their current financial position”, it announced today.
Your author has quoted the results for the entire ANZ Wealth division. This includes both the life insurance business purchased by Zurich and the Pensions & Investments/ADG business purchased by IOOF. The purchase reference is to IOOF only which may confuse some readers. The Pensions & Investments/ADG business recorded an 18% uplift in profit in the results period from which you quote.