ANZ owns up to huge blowout in bad advice

THE number of cases where ANZ financial planners were identified as providing bad advice surged fortyfold in less than a decade, the banking royal commission has heard.

As the second round of hearings resumed yesterday, it emerged the number of cases where ANZ staff were detected to have provided inappropriate financial planning advice blew out dramatically over the eight years to 2016.

Counsel assisting the com- mission Rowena Orr, QC, tabled an internal audit document revealing there had been 60 such cases in 2008.

That number leapt over the following years and in 2014, clocked in at 1401. In 2015, it hit a peak of 2810.

It then “dipped” the following year, but only to 2499 — still more than 40 times the tally in 2008.

Ms Orr presented the document to Kylie Rixon, the chief risk officer fo ANZ’s wealth management division.

The document also re- vealed ANZ planners routinely failed in their obligation to act in customers’ best interests.

It showed that in ANZ’s financial planning division and at offshoots Millennium 3 and RI Advice — formerly RetireInvest — 5 per cent of files audited in 2015 flunked the bestinterest test.

Ms Orr questioned if the number of bad-advice cases had surged because ANZ’s detection systems had previously been deficient.

She asked Ms Rixon if the bank’s monitoring systems were inadequate before 2015. The ANZ banker replied: “Yes.”

The audit report also revealed there were fears in the bank of systemic risk due to the problems in its system for monitoring planners.

ANZ was concerned staff could breach licence conditions, customers were at risk of receiving bad advice, and it might have to fork out $20 million in refunds.

Ms Rixon said it was “very regrettable” the bank had taken so long to fix its moni- toring systems. “(ANZ) has reduced the risk but it has not come down to where we would like it to be,” she said.

Ms Rixon also revealed 71 financial planners had been “performance managed” in the past year and “more than half” had left as bank increased financial-planning standards.

ANZ also removed revenue-based performance objectives for financial planners less than two weeks ago as it prepared for the commission, it emerged.