To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Appearing before the House of Representatives’ standing committee on economics on Wednesday (27 March), ANZ’s deputy CEO and group executive of wealth, Alexis George, revealed that the bank has paid approximately $200 million in remediation settlements to customers over the past few years.
Ms George said that the costs were more accurately realised after the bank “put formal processes in place to address remediation”.
Liberal MP and committee chair Tim Wilson asked if remediation cost had increased over the past few years in response to scrutiny from the committee, the banking royal commission, and from regulators.
ANZ CEO Shayne Elliott, who also appeared before the committee, responded: “Yes, [it] would be a meaningful increase. It would have more than doubled.”
However, Mr Elliott acknowledged that part of the increase was as a direct result of public scrutiny but claimed that much of the rise in remediation costs was incurred off the back of the bank’s simplification strategy.
“[The scrutiny has] asked questions of us to go back and look and assess whether we’ve gone and done the work properly on some of [the remediation cases].
He added: “[However], a lot of it, in ANZ’s case, is to do with the strategic refocus of our business to simplify the bank.
“As you undertake that – agree to sell, shut, shrink businesses – it exposes problems and risks that we might not have otherwise been aware of.”
Deputy CEO Alexis George also disclosed to the committee that ANZ had booked a provision of another $365 million in remediation and $150 million in costs for expected charges in the coming year.
“We recognise that we still have a lot of work to do there,” Ms George said.
The ANZ CEO conceded that while costs are expected to rise in the short-term, the bank is working to significantly reduce its remediation expenses in the medium-term by improving its processes.
“If we are well managed and well run, we shouldn’t have any remediations, and that’s clearly a failing on our part,” he said.
When asked if the bank had set a target for reducing its remediation costs, Mr Elliott said: “No. I’d like it to be zero, but I’m realist to say it’s unlikely to be there.”
“It shouldn’t be hundreds of millions of dollars. It should be significantly less than $100 million, clearly.
“[Remediation] is a real cost to the business; it’s a real cost to our customers.”
EDR complaints rise
Ms George also revealed that since the launch of the Australian Financial Complaints Authority (AFCA) on 1 November 2018, customers have lodged 1,400 complaints against the bank.
Ms George stated that of those complaints – some of which filtered from former external dispute resolutions (EDR) bodies – 650 remain outstanding.
The deputy CEO conceded that the bank experienced an increase in customer complaints since the launch of AFCA.
“There definitely was an increase in the volume that went through to external dispute resolution in the second half of last year, so that was the case according to average history,” she said.
Mr Elliott attributed the rise to an increased awareness of EDR schemes among customers.
“We’ve had our own discussions around that because there has been an increase across the board in terms of customers coming to us, customers going to our customer advocate and then customers going through to AFCA,” he said.
“I believe it’s largely an awareness issue,” he said. “I think the creation of AFCA itself gave a lot of publicity to it, and then the royal commission reminded people of these resolution channels.”