Following concerns raised by ASIC, the Australia and New Zealand Banking Group (ANZ) has agreed to an independent review of its One Path subsidiaries’ compliance functions.
ASIC sought the review following a significant number of breaches reported by the ANZ Group in relation to its life, general insurance, superannuation and funds management activities. These activities are operated through its wholly-owned OnePath group of subsidiary companies.
From early 2013 to mid-2015, around 1.3 million customers were affected by breaches, requiring refunds and compensation of around $4.5 million, rectifications and other remediation of approximately $49 million. Not all breaches required monetary remediation. Examples of breaches include:
- 1,422 superannuation fund members had $28.7 million in contributions allocated to the incorrect super account of the member for a period up to 12 months. ANZ has now returned these funds to the correct accounts and provided over $400,000 compensation for lost earnings and/or incorrect fees.
- OnePath failed to take further action in relation to 21,000 cheques it had sent to customers that were not banked within 15 months. These cheques included proceeds of insurance claims, superannuation benefits and refunds of premiums. $2.9 million was ultimately returned to customers with a further $11.6 million treated as unclaimed monies.
ASIC was concerned that the breaches together reflected compliance issues which may impact on Australian Financial Services (AFS) licence obligations of entities in the ANZ Group. ANZ has engaged PricewaterhouseCoopers (PwC) to independently review the OnePath subsidiaries’ compliance management framework.
ANZ has agreed to take appropriate actions to implement recommendations stemming from the PwC review. ASIC is also separately monitoring rectification of the breaches as some breaches are yet to be finalised.
ASIC Deputy Chair Peter Kell said, ‘Appropriate compliance and systems to monitor compliance are essential for banks to adhere to their AFS obligations. This is important in maintaining customer trust and confidence in the sector.’
‘ASIC expects all AFS licensees to have systems in place to ensure they can satisfy their general AFS obligations.’
ASIC acknowledges the co-operative approach the ANZ Group have taken in this matter, including in ensuring that breaches were notified to ASIC.
ANZ Group customers who have any questions should contact 133 665.
Background
The ANZ Group’s subsidiaries with AFS licences include OnePath Custodians Pty Ltd, OnePath Life Limited, OnePath Funds Management Limited and OnePath General Insurance Pty Limited.
The breaches included:
- failure to provide disclosure documentation for some insurance products;
- inadequate systems or processes to ensure compliance. In some cases processes did not ensure reasonable steps were taken to contact customers or that statutory timeframes were met. Some processes included manual steps that were not followed up on;
- insufficient supervision of some outsourced functions, including third party call centres;
- processing errors, such as payments made to incorrect superannuation accounts; and
- significant time taken to identify some breaches.
The PwC review will:
- review and assess the design and operational effectiveness of the OnePath compliance management framework including policies and processes;
- assess the adequacy of processes designed to identify and manage the financial services laws which apply to the OnePath companies holding AFS licences; and
- identify any gaps in the compliance management framework and report back to the ANZ Group and ASIC.
ANZ today confirmed it engaged PwC in January 2016 to conduct an independent
compliance review within its OnePath subsidiaries, following compliance breaches that were
proactively reported to the Australian Securities and Investments Commission (ASIC) from
early 2013.
ANZ Wealth Australia Managing Director Alexis George said: “While the majority of these
compliance breaches are in the past, we know we can do better. We agreed with ASIC last
year that an independent review of our systems will be undertaken to further strengthen our
compliance systems.
“We would like to apologise to impacted customers and assure them we’ve been working
hard to improve our controls.
“As soon as we became aware of issues early in 2013 we reported these breaches to ASIC
and provided our full cooperation with their review of the matter. We’ve also taken
significant additional steps to strengthen our compliance systems, including targeted
external audits and additional staff training to improve monitoring, reporting and
governance,” Ms George said.
Since February 2013, ANZ has compensated approximately $4.5 million to around 1.3
million OnePath customers. Breaches included not following up on some unbanked cheques
and for superannuation contributions not being allocated to the customer’s correct account.
None of the breaches relate to life insurance claims.
As part of the review, PWC will identify any gaps in OnePath’s compliance systems and
make recommendations to improve frameworks, policies and processes. The review began
in January 2016 and is expected report back to both ANZ and ASIC by the middle of the
year.
