Tag: ANZ

ANZ Job Ads Stronger In January

In seasonally adjusted terms, ANZ Job Advertisements jumped 6.2% m/m in January, more than reversing the 2.7% fall in the previous month. On an annual basis, job ads are up 13.8%, a step up from the 11.4% y/y rise in December.

In trend terms, job ads were up 0.7% m/m in January following a similar increase in the previous month. The annual trend rate slowed from 12.3% in December to 11.9% in January.

ANZ says:

It is encouraging to see a strong recovery in Job Ads last month after a slight retreat in December. The bounce in January is in line with ongoing strength in business conditions, capacity utilisation and other surveys of employment conditions. Taken together, there is some evidence that the slowdown in the trend we saw in H2 last year may reverse in the coming months. That said, given the seasonal volatility often associated with this time of year, it is perhaps too early to tell for sure.

In recent months the RBA has noted the strong gains in employment across states, as well as the increase in labour force participation. The RBA will likely see the Q4 CPI result as broadly positive, with clear signs that inflationary pressures have stabilised, albeit at a level below the policy band. All eyes now turn to the Q4 wage number out on 21 February. We see a rise of 0.5% q/q as being consistent with our view that the RBA will raise rates this year in an effort to bring the real cash rate back to zero.

ANZ responds to fiduciary duty breach claims

From Investor Daily.

Last week, ASIC issued a report confirming in-house product bias within institutionally-aligned licensees between 2015 and 2017, finding that 68 per cent of all client funds across these businesses had been invested in products owned and operated by related entities.

A review of sample files where advice to switch products to an in-house product was provided also found that as many as 75 per cent did not meet the FOFA fiduciary duty in ASIC’s opinion.

Responding to questions from InvestorDaily, a spokesperson for ANZ said its internal review of in-house versus external product distribution had yielded different results to those of the regulator, but noted the bank was unaware how ASIC gauged the numbers.

“Our assessment of the split between ANZ Financial Planning customers’ investments in ANZ products and those in external products is closer to 47/53 respectively, but we do not know what methodology ASIC have used,” the spokesperson said.

The bank said it also permits advisers to apply to recommend products not included on their APLs, and last year received 1,200 of these requests – an “overwhelming majority” of which the spokesperson said were approved.

The spokesperson added that the bank “will continue to work with ASIC and all the other regulators to help them with the important work they do to keep our industry secure and accountable”.

ANZ’s comments follow the release of an internal letter written by the bank’s chief executive, Shayne Elliott, addressing the royal commission into banking, superannuation and financial services.

In the letter, Mr Elliott said seeing all the bank’s instances of misconduct over the last decade laid out in a single document was “confronting”.

“It’s completely unacceptable that we have caused some of our customers financial harm and emotional stress. I’m ultimately accountable for this and once again apologise,” Mr Elliott said.

“Of course, it would be easy to lay the blame on a few bad apples or to say that these are largely historical technical glitches resulting from large complex IT systems. That would be wrong.”

Spokespeople for AMP and Westpac both referred InvestorDaily to the FSC, which has also challenged the investigative approach used by the regulator.

Financial Advice Conflicts Still Exists In Vertically Integrated Firms

An Australian Securities and Investments Commission (ASIC) review of financial advice provided by the five biggest vertically integrated financial institutions has identified areas where improvements are needed to the management of conflicts of interest. 68% of clients’ funds were invested in in-house products.

This highlights the problems in vertically integrated firms, something which the Productivity Commission is also looking at.

The review looked at the products that ANZ, CBA, NAB, Westpac and AMP financial advice licensees were recommending and at the quality of the advice provided on in-house products.

The review was part of a broader set of regulatory reviews of the wealth management and financial advice businesses of the largest banking and financial services institutions as part of ASIC’s Wealth Management Project.

The review found that, overall, 79% of the financial products on the firms’ approved products lists (APL) were external products and 21% were internal or ‘in-house’ products. However, 68% of clients’ funds were invested in in-house products.

The split between internal and external product sales varied across different licensees and across different types of financial products. For example, it was more pronounced for platforms compared to direct investments. However, in most cases there was a clear weighting in the products recommended by advisers towards in-house products.

ASIC noted that vertical integration can provide economies of scale and other benefits to both the customer and the financial institution. Consumers might choose advice from large vertically integrated firms because they seek that firm’s products due to factors such as convenience and access, and recommendations of ‘in-house’ products may be appropriate. Nonetheless, conflicts of interest are inherent in vertically integrated firms, and these firms still need to properly manage conflicts of interest in their advisory arms and ensure good quality advice.

ASIC will consult with the financial advice industry (and other relevant groups) on a proposal to introduce more transparent public reporting on approved product lists, including where client funds are invested, for advice licensees that are part of a vertically integrated business. ASIC noted that any such requirement is likely to cover vertically integrated firms beyond those included in this review. The introduction of reporting requirements would improve transparency around management of the conflicts of interests that are inherent in these businesses.

ASIC also examined a sample of files to test whether advice to switch to in-house products satisfied the ‘best interests’ requirements. ASIC found that in 75% of the advice files reviewed the advisers did not demonstrate compliance with the duty to act in the best interests of their clients. Further, 10% of the advice reviewed was likely to leave the customer in a significantly worse financial position. ASIC will ensure that appropriate customer remediation takes place.

Acting ASIC Chair Peter Kell said that ASIC is already working with the major financial institutions to address the issues that have been identified in the report on quality of advice and management of conflicts of interest.

‘There is ongoing work focusing on remediation where advice-related failures have led to poor customer outcomes, and the results of this review will feed into that work,’ said Mr Kell.

ASIC is already working with the institutions to improve compliance and advice quality through action such as:

  • improvements to monitoring and supervision processes for financial advisers; and
  • improvements to adviser recruitment processes and checks.

ASIC will continue to ban advisers with serious compliance failings.

ASIC highlighted that the findings from this review should be carefully examined by other vertically integrated firms. ‘While this review focused on five major financial services firms, the lessons should be considered by all vertically integrated firms in the financial services sector.’

Download the report

ANZ and ASIC reach settlement on suspected third party frauds

ANZ today announced it is filing joint court submissions with the Australian Securities and Investments Commission (ASIC) on an agreed settlement for a number of cases where car finance brokers or dealers engaged in suspected fraud when submitting loan applications on behalf of customers to Esanda between 2013 and 2015.

In a statement of agreed facts, ANZ acknowledged it did not take reasonable steps to verify customers’ financial situation in relation to 12 loan contracts in circumstances where there was reason to doubt the information being provided by third party intermediaries.

The third party intermediaries involved in these cases were: United Financial Services Pty Ltd trading out of the Best Buys Auto car dealerships; Motorcycle Finance and Insurance Pty Ltd; and Combined Motor Traders Pty Ltd.

ANZ detected and reported the suspected fraudulent conduct by these third party intermediaries. ANZ has disaccredited the individuals responsible for submitting the 12 loan contracts and no longer accepts loan applications from them.

Commenting on the agreed settlement, ANZ Group Executive Australia Fred Ohlsson said: “ANZ has worked closely with ASIC on its investigation of this matter. We take our responsible lending obligations seriously and we have since taken steps to strengthen our ability to prevent and detect fraud by third parties.”

Since reporting the issue, ANZ has significantly increased both the supervision and training of asset finance brokers.

ANZ has agreed to pay a $5 million fine as part of the settlement and $390,000 of ASIC’s costs. This is subject to court approval. ASIC acknowledged ANZ’s cooperation throughout the investigation.
ASIC has also reviewed ANZ’s proposed approach to remediating approximately 320 customers who took out car loans through these three intermediaries (between 2013 and 2015), with the total remediation amount expected to be around $5m.

ANZ Confirms UDC sale to HNA is not proceeding

ANZ today announced the agreement to sell UDC Finance to HNA Group will not proceed as the agreement with HNA has now been terminated in accordance with the contracted timeframe.

This follows the 21 December 2017 announcement that New Zealand’s Overseas Investment Office had declined HNA Group’s application to acquire UDC Finance.

ANZ Group Executive and New Zealand CEO David Hisco said: “Following the termination of the agreement with HNA, we’ll continue to assess our strategic options regarding the future of UDC, although there is no immediate requirement to do anything.

“It will be business as usual for staff and customers. UDC continues to be a very profitable business with a strong capital position and a growing loan portfolio across a range of industries.

“Its focus remains on its core business of financing vehicles and equipment for people and companies across New Zealand,” Mr Hisco said.

ANZ Job Ads Droop In December

The latest ANZ Job Ads data for December 2017, in seasonally adjusted terms, fell 2.3% largely unwinding the increase over the previous two months.

On an annual basis job ads are up 11.4%, a slight moderation from 12.0% y/y growth the previous month.

ANZ says:

The labour market in 2017 was characterised by widespread job growth (particularly in full time jobs), an increase in participation and a fall in the unemployment rate to a four-year low of 5.4%. Growth in ANZ Job Ads provided a leading signal of this strong performance.

As such, the fall in job ads in December might be a source of concern. There can be considerable volatility around this time of year, however. For this reason we are not unduly worried around the drop in December job ads. We note, for instance, that job ads fell nearly 2% in December 2016 without signalling a turn in labour market conditions. Having said this, the easing in the trend pace of job ads growth in the fourth quarter lends support to our view that we may see a slowing in employment growth over the coming months. We believe that, after 14 straight months of growth, employment has overshot the levels implied by job ads and as such a period of moderation in jobs growth is likely.

ANZ Tweaks Mortgage Broker Commissions

From The Adviser.

ANZ has advised mortgage brokers that its upfront commission structure will change from next month, by removing the volume incentive.

In a note to brokers obtained by The Adviser, ANZ’s general manager of broker distribution, Simone Tilley, explained that the bank has recently completed a comprehensive review of its commission structure.

“As a result, I wish to advise that ANZ will make changes to its upfront commission structure, effective 1 February 2018,” Ms Tilley said.

“We believe that the planned changes will provide a simpler commission structure which delivers on ANZ, aggregator and broker requirements and is more transparent for the customer.

“There has been no change to ANZ’s current trail commission structure.”

From 1 February 2018, ANZ will pay an upfront commission of 62.5 basis points.

Ms Tilley explained that this base upfront rate does not include any additional LVR adjustment component calculated and payable under the new structure.

The bank currently pays an upfront commission of 57.5 basis points. However, brokers writing more than $100 million with the group receive an upfront payment of 62.5 basis points.

The new change removes the volume-based incentive from ANZ’s commission structure, something that was recommended by the Combined Industry Forum in response to the ASIC and Sedgwick reviews.

ANZ continues to pay the lowest upfront commissions of the big four banks.

ASIC’s report into broker remuneration noted that volume-based and campaign-based bonus commissions that supplement the standard commission model can create potential conflicts of interest and “higher risk that brokers will place customers with lenders for the wrong reasons”.

As such, the Combined Industry Forum outlined that by the end of 2017, industry participants “should respond to ASIC’s recommendation” to cease these payments.

The Combined Industry Forum report, which was released on 11 December, revealed that there were 38 groups collaborating on the response, including the four major banks, five industry associations, aggregators, brokerages and consumer group Choice.

ANZ Bank New Zealand’s Sale of UDC Finance Blocked

ANZ Bank New Zealand has been informed that New Zealand’s Overseas Investment Office has declined HNA Group’s application to acquire UDC Finance.

ANZ Bank Group Executive and New Zealand CEO David Hisco said: “While the sale agreement between the parties remains in place, unless HNA successfully overturns the OIO decision, the sale will not proceed.

“We don’t know if HNA will attempt to overturn the decision.

“If the sale does not proceed, we’ll assess our strategic options regarding the future of UDC. It’s a great business and there is no immediate requirement to do anything, particularly given the strength of ANZ’s capital position.

“UDC continues to be a highly profitable and strong business, with great staff and customers, and a growing loan portfolio across a range of industries.

“UDC’s focus remains on its core business of financing vehicles and equipment for people and companies across New Zealand. So, it will be business as usual for our staff and customers.”

This OIO decision has no impact on the recently announced $AUD1.5 billion on-market buy back of ANZ Banking Group shares.

The UDC transaction proceeds are equivalent to ~10 basis points of APRA CET1 capital. If the transaction does not go ahead, ANZ’s FY18 earnings will no longer be adjusted for the sale. The transaction summary detail was included in the ANZ Banking Group News Release of 11 January 2017.

ANZ completes sale of 20% stake in Shanghai Rural Commercial Bank

ANZ today announced it has completed the sale of its 20% stake in Shanghai Rural Commercial Bank (SRCB), originally announced in January 2017.

As part of the Group’s broader capital management plan, ANZ now intends to buy-back up to $1.5 billion of shares on-market.

ANZ Chief Financial Officer Michelle Jablko said: “ANZ’s strong capital position combined with the progress made in simplifying our business means we are now in a position to commence returning surplus capital to shareholders while still complying with APRA’s unquestionably strong capital requirements.”

ANZ’s CET1 capital ratios as at 30 September 2017 will remain broadly unchanged on a pro forma basis with the ~40 basis point benefit from the completion of SRCB offsetting the impact of the on-market share buy-back.

ANZ has already purchased ~$500 million shares on-market to neutralise the effect of the dividend reinvestment program for both the interim and final 2017 dividends as well as the impact of ANZ’s share-based employee compensation plans.

The divestment of non-core businesses, including the sale of our Australian life insurance business last week, should provide ANZ with flexibility to consider further capital management initiatives in the future.

ANZ will continue to manage its capital prudently. Further capital management initiatives will only be undertaken while ensuring sufficient capital is available to support growth as well as being subject to business conditions and regulatory approval after the actual receipt of the relevant sale proceeds.

In order to comply with regulatory requirements, the purchase of shares will likely begin in January 2018, subject to market conditions.

ANZ reduces international money transfer fees for foreign currencies

ANZ today announced it was reducing international money transfer fees from Australia to foreign countries, effective immediately.

Exchange rates have also been reduced for all ANZ offered currencies, including US Dollars, Euros, New Zealand Dollars, Great Britain Pounds, Hong Kong Dollars, Japanese Yen, Philippine Pesos and Indian Rupees.
For Internet Banking there will be no fee1 for all International Money Transfers sent from Australia in a foreign currency above the equivalent of AUD $10,0002. For transfers below that level the fee has been reduced from $18 to $12.

Commenting on the decision, Group Executive Australia Fred Ohlsson said: “Australia is one of the most digitally active nations in the world, and our customers are using electronic payment methods more than ever before.”
“This decision to reduce fees and rates is great news particularly for those who regularly send money to their home countries. We’re pleased to be making these payments more affordable for our customers,” Mr Ohlsson said.