ANZ puts Hayne recommendations into effect

ANZ Bank has announced the 16 actions it will initially take to improve the treatment of retail customers, small businesses and farmers in Australia, as well as ensure public reporting of remediation activities.

The major bank’s chief executive, Shayne Elliott, said ANZ’s response to Commissioner Kenneth Hayne’s recommendations is not merely being treated “as a compliance exercise”.

“Rather, we are taking action now to respond to many of Commissioner Hayne’s recommendations that directly impact customers as well as the spirit of his final report. I’m confident these initial reforms will provide our customers with a fairer banking service,” he continued.

Farmers and Indigenous Australians 

In line with Commissioner Hayne’s final recommendations, the major bank has agreed to cease charging default interest on loans secured by agricultural land that has been affected by drought or other natural disasters should farmers get into loan arrears.  

ANZ is also pledging access to farm debt remediation “as soon as a loan is classified as distressed”, as well as favouring “workouts” over enforcement or appointing external managers.

The major bank has additionally committed to scrapping overdrawn and dishonour fees on its Pensioner Advantage accounts, after its dealings with pensioners were scrutinised by the banking royal commission.

One case Commissioner Hayne heard about pertains to ANZ’s treatment of an Indigenous Australian mother of three school-aged children who was consistently being charged dishonour and overdrawn fees (average of $200 per month) that she could not afford, despite communicating her intention to open a fee-free bank account.

Creating a dedicated phone service and easier account identification options for Indigenous customers are also among the list of changes ANZ has announced.

Nathan Boyle from the Indigenous Outreach Program of the Australian Securities and Investments Commission provided statements to the royal commission, pointing out that: “Sometimes we see financial services [entities] have policies about the types of questions that are asked and they can only ask questions in a certain way, which might not make sense to an Aboriginal person in a remote community.”

He suggested that a question like “what number is on the front of your house” would make more sense to people living in remote communities than “what is your street address”.

Further, ANZ said it would “proactively” contact customers repaying their credit card debt in consistently small amounts to encourage them to move to lower rate cards.  

“We believe that it is a community standard and expectation that we assist our customers to benefit from our products where we can. We are conscious that we must also take our customers’ choices into account when we undertake this type of work,” the major bank’s implementation plan states.

Design and distribution of products

ANZ has also committed to ensuring that its products are targeted and offered to the right customers.

The government had accepted Commissioner Hayne’s recommendation to extend the design and distribution obligations in the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 to products regulated by the National Consumer Credit Protection Act 2009 and the Australian Securities and Investments Commission Act 2001.  

Specifically, the design and distribution obligations will require product issuers “to develop a ‘target market determination’ that will specify the target market for each of their products.”

“This target market must be such that the product will likely be consistent with the likely objectives, financial situation and needs of customers within that target market,” the final banking royal commission report states.

Remuneration and regulatory cooperation

ANZ said it will also “redesign” how it manages and rewards staff to ensure it is in line with customer interests and the “long-term health of the bank and team”, as opposed to individual outcomes. The major bank reiterated that it will continue its work to implement all of the recommendations of the Sedgwick Review.

In addition, ANZ has vowed to engage as a “model-litigant” in cases where the bank is involved in a court process with customers (excluding class action suits).

“We are conscious that when our retail and small business customers have a complaint against us, or we have a dispute with them individually, we have access to more legal resources than they do,” the major bank’s implementation plan states.  

“The principles that we are seeking to adopt... are aimed at giving customers more comfort that we will treat their complaint against us with respect and, if legal proceedings cannot be avoided, act fairly in them.”

The major bank has also committed to providing the Australian Financial Complaints Authority (AFCA) to consider disputes dating back to 1 January 2008 and to be “fully cooperating” with AFCA to reach resolutions.  

Mr Elliot admitted that these reforms are “the first step” and that the cultural changes that need to be made will take “several years”.

“However, we will continue to make the investments needed to improve our bank, and we will also move quickly to implement the recommendations requiring legislative change once those new laws come into effect,” the ANZ CEO said.

“We will also cooperate with government, the regulators and industry on turning the broader set of Commissioner Hayne’s recommendations into effective protections for our customers.”

ANZ said it will provide further updates on its response to royal commission recommendations in May when it releases its interim results.

[Related: ANZ CEO rues ‘overly conservative’ lending policy]