ANZ tests IOOF on big super transfer
Fresh doubt has been thrown on ANZ’s plan to offload about 700,000 super customers to IOOF, with parliament told the bank has demanded the troubled wealth manager answer questions raised by scathing findings about it in the financial services royal commission.
ANZ deputy chief executive Alexis George yesterday told a House of Representatives economics committee inquiry into the big four banks that the chairman of ANZ trustee company OnePath wrote to the IOOF board raising questions about issues aired at the commission.
However, IOOF chairman George Venardos yesterday denied the letter, received by IOOF’s board last week, dealt with a range of issues raised at the royal commission. He said the letter asked questions about conflicts of interest, specifically IOOF’s so-called “dual regulated entity” structure where the same company is both a super trustee and a fund manager.
IOOF managing director Chris Kelaher was grilled about this issue during a torrid session in the witness stand at the royal commission in August.
The DRE structure presents a conflict of interest because as super trustee the company is supposed to act in the best interests of retirement savers but as a fund manager it has a responsibility to return a profit to its parent.
ANZ plans to transfer its super customers to IOOF are part of a $1 billion sale of its OnePath wealth business that last week saw it hand over a string of financial advice businesses.
As The Australian has reported, the board of ANZ’s super trustee company, OnePath Custodians, will meet in December to decide whether to go ahead with the move.
Under superannuation law, to tick off on the deal, which is known as a successor funds transfer, the board must decide that it is in the best interests of members.
At yesterday’s parliamentary hearing, Victorian Labor MP Clare O’Neil laid out to Ms George the royal commission’s laundry list of shocking revelations about IOOF, including allegations by counsel assisting of cheating on compliance and shoddily kept board minutes.
In its submission to the commission, the Australian Prudential Regulation Authority also said Mr Kelaher “demonstrated a failure to understand the covenants under the SIS Act and obligations of a trustee under trust law” and made an “untrue” statement in a letter to the regulator. IOOF has rejected the allegations.
“IOOF has not come out very well from the royal commission — I don’t think I’m editorialising too much to say that,” Ms O’Neil said yesterday.
“APRA has said it’s concerned about IOOF’s structure and governance. There’s been evidence presented that half of the members of IOOF’s Super Choice fund would be better off in another account, that they are
ANZ and NAB executives regarded compensating customers they ripped off as a “distraction”, the banks admitted yesterday.
Shayne Elliott, the chief executive of ANZ, yesterday confessed to parliament that his bank was “unfortunately” one of two fingered by the corporate regulator over internal documents referring to remediation as a distraction.
And a spokeswoman for NAB, whose chief executive Andrew Thorburn is to face parliament next Friday, told The Weekend Australian it was the other bank.
Mr Elliott was grilled by Labor MP Matt Keogh about a report released last month in which the corporate regulator slammed three banks — ANZ, CBA, and NAB — for taking an average of a year to start paying compensation after figuring out that they had dudded clients.
“We identified historical documents from two of these major financial groups that referred to remediation for consumers as a ‘distraction’,” ASIC said in the report. “This is evidence of a misalignment in these two groups’ cultures with their stated values of prioritising consumers.”
Asked if ANZ was one of those two groups, Mr Elliott said: “Unfortunately, yes”.
CBA chief executive Matt Comyn yesterday said his bank was not one of the two groups in question, leaving NAB as the only remaining possibility.
A NAB spokeswoman told The Weekend Australian ASIC’s reference was to a slide in a 2016 “NAB Risk Culture Guide” titled “Getting it wrong always costs more than if we got it right the first time”.
She said the second dot point on the slide read: “Remediation tasks distract management away from opportunities to meet customer needs.”
NAB was “working hard to be better for customers and have made remediation a priority”, she said. “We acknowledge that in the past we have been too slow to find and fix issues and to remediate customers.”
Appearing before the House of Representatives economics committee yesterday, Mr Elliott said he was “embarrassed” to read banking royal commissioner Kenneth Hayne’s scathing interim report into the scandal-ridden financial services industry, apologised for the bank’s misconduct and said it had not done enough to hold executives accountable for wrongdoing.
He said that last year ANZ had fired 200 employees for misconduct, but not all the terminations were related to the royal commission.
Mr Elliott, who has been CEO since 2016 and before that was chief financial officer under former boss Mike Smith, told the committee that “in the past, ANZ has not focused sufficiently on formally holding executives to account for failures that harm customers”.
He slammed ANZ’s previous “matrix management” structure for blurring lines of responsibility and said the bank had moved towards a simpler command structure.
Under questioning from Labor’s Matt Thistlethwaite, Mr Elliott said the bank would take another look at its so-called “bal- anced scorecard”, which is used to determine bonuses for staff.
He accepted that a referral metric on the scorecard used by home lending managers that was tabled before the royal commission “can be interpreted as a quasi-sales target, and that shouldn’t be the case”.
Mr Elliott said reading Mr Hayne’s interim report, handed down a fortnight ago, “was frankly really saddening. It made me feel embarrassed for the industry,” he said. “We have broken the trust of many of our customers, for which there is no excuse and I apologise.”
He said that while he was ult- imately responsible for the bank’s culture, it was something that had built up over 185 years.
“Direct and documented links between specific failures and consequences have been limited and insufficient,” he said.
“This is particularly true for events, including those studied by the commission, which have unfolded over time or occurred under a number of executives.”
Asked by Mr Thistlethwaite whether he stood by his statement to the committee in 2016 that a banking royal commission would be a distraction, Mr Elliott said: “No.”
“I was wrong,” he said.
Shayne Elliott appears at the House economics committee hearing in Canberra yesterday