The ANZ Bank has advised it will be compensating advice clients who did not receive their full package of services, in response to the latest advice failure to hit the industry.
An internal investigation commenced by ANZ in 2014 found that around 8,500 customers of its Prime Access service did not receive a documented annual review, despite this being included within the package of services ANZ had agreed to provide its clients.
Prime Access is a fee-for-service advice package which was introduced in 2003 and includes priority access to financial planners, investment monitoring alerts and a documented annual review.
ANZ apologised for the error, saying the affected customers would be reimbursed as soon as possible. The bank said it had reported the issue to the Australian Securities and Investments Commission (ASIC) and has commenced a remediation program supported by external consultants PwC and law firm Clayton Utz.
“We have also put in place a range of measures to ensure this issue does not happen again,” said ANZ CEO Global Wealth, Joyce Phillips. “This includes improved training, technology, audit and supervision as well as including the documented annual review as an essential component of balanced scorecards for our financial planners.”
ANZ estimated the cost of reimbursing the affected clients to be approximately $30 million. The bank said it was working with ASIC to finalise the refund methodology and payments will commence as soon as the methodology is agreed. It has also advised that all Prime Access annual reviews and documentation since 2013 have been delivered, as per the agreements with clients.
ASIC will consider all regulatory options where we find evidence of breaches of the law relating to fees being charged where no advice service has been provided
Addressing the issue as part of its presentation to the Senate Economics References Committee’s Scrutiny of Financial Advice hearing in Canberra this week, ANZ Deputy CEO, Graham Hodges, again reiterated the bank’s disappointment at, and apologised for, its failure to deliver the contracted services to its customers.
The announcement follows an update from ASIC on its Wealth Management Project, in which the regulator said it was investigating multiple instances of licensees charging clients for financial advice, including annual advice reviews, where the advice was not provided.
ASIC Deputy Chairman, Peter Kell, said: “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. We will look to ensure that advice licensees follow a proper process of customer remediation and reimbursement of fees where such breaches have occurred.”
The ASIC Wealth Management Project was established in October last year with the objective of lifting standards in major financial advice providers. Under this project ASIC said it was carrying out a number of investigations and conducting a range of proactive risk-based surveillances with particular focus on compliance in large financial institutions.
