ANZ agrees to lift wealth management game

Australian Financial Review Apr 6 2018 12:41 PM

James Frost

ANZ Banking Group will pay $3 million and submit to regular independent reviews of its systems and processes after charging thousands of wealth management clients for a service they never received.

The Australian Securities and Investments Commission published the terms of an enforceable undertaking with the bank on Friday morning, which revealed refunds to 13,000 of the bank's wealth management customer is forecast to reach $47.9 million.

The bank had previously estimated the issue affected 8000 customers and would cost $30 million.

ANZ customers who had signed up to the Prime Access wealth management offering paid for and were entitled to documented annual reviews but did not receive them. The issue affected customers who signed up to Prime Access Connect, Prime Access Essentials and Prime Access Tailored.

ANZ said the issue began as far back as 2006. ASIC said the bank knew about the issue as early as 2008 but let the problem fester for another five years and did not report the breach to ASIC until August 2013.

In the EU, the regulator said it was concerned the bank is not doing everything in its power to ensure its services were being provided "efficiently, honestly and fairly" or that it had "adequate systems and processes in place".

Apology to customers

ASIC deputy chair Peter Kell said charging customers for services that were never provided undermined trust in the sector and the agreement would help reassure consumers they were getting what they paid for.

ASIC estimates the big four banks and AMP have refunded around $200 million over the last five years for charging customers fees for services they never received.

The issue of "fees-for-no-service" will be the first area of focus for the next bout of public hearings for the banking royal commission.

ANZ and its employees will not be asked to provide evidence in this particular area however with the royal commission listing AMP, Commonwealth Bank and their respective subsidiaries as the case studies it wishes to examine.

ANZ group executive of wealth Alexis George said the bank had apologised to the customers affected and the program of remediating customers was now largely complete.

"We acknowledge we did not meet customers' expectations by not providing them the services we promised. We have since introduced measures to prevent this from happening again and have largely completed making remediation payments to impacted clients," Ms George said.

The bank has agreed to appoint an independent expert to look at its systems within 15 days and will not seek to pass the costs of complying with the enforceable undertaking on to ANZ customers.