9 SEPTEMBER 2021

ROYAL COMMISSION
RECOMMENDATIONS
AND ANZ ACTIONSSEPTEMBER 2021

ROYAL COMMISSION RECOMMENDATIONSOVERVIEW OF ANZ RESPONSE
ANZ is responding to the spirit and the letter of the Royal Commission.
•

We announced sixteen commitments in February 2019. These responded to a number of Commissioner Hayne’s recommendations and comments. These weremade to improve the treatment of retail customers, small businesses and farmers in Australia. They picked up on work already undertaken or started in Australia as
well as adding new reforms to past initiatives.

•

Our progress as at 9 September 2021 on these commitments is set out in Table 1 below.
oThe progress includes action in relation to distressed agricultural loans, remuneration of front line staff, the Sedgwick Review, and culture and governance.

oThese actions relate to recommendations 1.14, 5.4, 5.5 and 5.6 which were directed specifically at banks for their action independent of Government andregulator responses.

•

Our progress as at 9 September 2021 on responding to all of the 76 Royal Commission recommendations is set out in Chart 1 below.

•

ANZ continues to engage with Government, the regulators and industry as they progress their response to the Royal Commission recommendations.

TABLE 1: PROGRESS WITH ANZ’S ROYAL COMMISSION COMMITMENTS
ActionRationale

Where we are up to

Removing

Commissioner Hayne’s recommendation 1.8 was that the

We completed this commitment.

overdrawn andBanking Code of Practice 2019 (Banking Code) be amended to,dishonour fees onamong other things, provide that banks:

Retail customers
1.

Make our products fairer
1.1.

basic accounts•

Without prior express agreement with the customer, will

Circumstances where it is not reasonably possible or practical to prevent an accountfrom becoming overdrawn are considered by the revised Banking Code of Practice,which came into effect on 1 March 2020.

not allow informal overdrafts on basic accounts; and•Will not charge dishonour fees on basic accounts.

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Action1.2.

Rationale

Where we are up to

Accelerating work

The design and distribution obligations in the new Part 7.8A of theWe have a dedicated team working on implementing the design and distribution

on how we design

Corporations Act 2001 (Cth) will commence on 5 October 2021.

obligations by 5 October 2021. This takes into account ASIC’s regulatory guide issued

and distributein December 2020.

products so that
customers get
products that better
meet their needs
2.

Improve our service to Aboriginal and Torres Strait Islander customers in remote communities
Commissioner Hayne encouraged banks to develop a

We completed this commitment. The service is staffed by bankers trained in indigenous

dedicated phone

telephone service to assist Aboriginal and Torres Strait Islander

cultural awareness and assisting vulnerable customers.

servicepeoples (and others living in remote areas) to access their

2.1. Setting up abanking.
2.2. Easier options toprove identity

Commissioner Hayne’s recommendation 1.8 was to amend the

We completed this commitment by introducing measures to make it easier for

Banking Code to follow AUSTRAC’s guidance about theindigenous customers to prove their identity.

identification and verification of persons of Aboriginal or Torres
Strait Islander heritage.
3.

Help customers by:
3.1.

Helping consumer

We want to assist our customers make choices which may help

We have acted on this commitment by establishing an ongoing process to contact andcredit cardthem manage and reduce their debt and banking costs.

offer assistance to credit card customers who are carrying persistent debt.

customers who arecarrying persistentdebt

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Action3.2.

Rationale

Where we are up to

Help eligible

We completed this commitment by establishing an ongoing process to contact

customers move tocustomers in receipt of eligible Centrelink or Veterans’ Affairs benefits to offer them alow-cost basic bankmove to a low-cost basic bank account.

accounts
Farming customers
4.

Publish clear principles on how we help farmers including through:We completed this commitment by implementing principles outlining the assistance weoffer to family famers in financial distress. 1
0F

4.1.

Not charging

Commissioner Hayne’s recommendation 1.13 was the Banking

farmers default

Code be amended to provide that, while a declaration remains ininterest in areas

force, banks will not charge default interest on loans secured bydeclared to be

agricultural land in an area declared to be affected by drought oraffected by drought

other natural disaster.

Relevant revisions to the Banking Code of Practice came into effect on 1 March 2020.
In our principles, we undertake to not charge default interest on a farmer’s loan facilities
if they are farming in an area subject to a drought or natural disaster government
declaration.

or other natural
disasters
4.2.

Valuing farm landCommissioner Hayne’s recommendation 1.12 was that theIn our principles, we undertake that all of our valuations are conducted independently of

separately from theAustralian Prudential Regulation Authority (APRA) should amend

loan origination to ensure independence between the valuation process and the loan

loan origination

its Prudential Standard APS 220 to require that internal appraisals

approval process.

processof the value of land taken or to be taken as security should be
independent of loan origination, loan processing and loan decision
processes.

1

Refer to https://www.anz.com.au/business/industries/agribusiness/farm-debt-mediation-commitment/

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Action4.3.

Rationale

Where we are up to

Giving farmers earlyCommissioner Hayne’s recommendation 1.14 was that banks,

In our principles, we undertake that:access to farm debt

when dealing with distressed agricultural loans, should offer farm

mediation if they get

debt mediation as soon as a loan is classified as distressed; andinto difficulties andmanage every distressed loan on the basis that a mutually agreed

supporting a“work out” will be the best outcome for bank and borrower, andnational scheme ofenforcement the worst.

farm debt mediation
4.4.

Reinforcing ourpreference forworking out

Commissioner Hayne’s recommendation 1.11 was that a•

Our team has specialist Agri bankers;•

We will offer early mediation to a farmer within 90 days of the banking
relationship being managed by our specialist team.
o

19. We have now resumed offering it.
•national scheme of farm debt mediation should be enacted.

agricultural loans or
appointing an
external manager

Before we participate in early mediation, we will inform farmers of their right, as
an alternative, to make a complaint to the Australian Financial Complaints
Authority (AFCA);•

We support a national farm debt mediation scheme and will always offer farmdebt mediation prior to enforcement action being taken; anddifficulties over
enforcingWe paused offering early mediation for a short period due to COVID-•

We believe that enforcement is a measure of last resort after other reasonableoptions have been explored. We also believe that early and continued
engagement is in the best interest of all and will likely result in a better
outcome.

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ActionRationale

Where we are up to

Redesign how we manage

Commissioner Hayne’s recommendation 5.4 was the regular

We completed this commitment by changing the way we financially reward and manage

and reward our people toreview of remuneration systems for front line staff to ensure thatthe performance of our people. These changes

Remuneration
5.

better focus on thethe design and implementation focuses on not only what staff do,interests of our customers,

but also how they do it.

•

Reduce the emphasis on variable pay and include replacing bonuses for thevast majority of employees with an incentive based on the overall performancethe long-term health of theof the ANZ Group.

bank and team, rather than•

individual, outcomes

Support a performance assessment process that focuses on both ‘what’
people achieve and ‘how’ they behave.

We complete an annual review of the Group Remuneration Policy, including theeffectiveness of our remuneration arrangements. There were no material changes
recommended in the February 2021 review.
6.

Continue to implement theCommissioner Hayne’s recommendation 5.5 was that banks

We have completed this commitment with the exclusion of those recommendations thatrecommendations of theshould fully implement the recommendations of the Sedgwick

have industry level dependencies.

Sedgwick remuneration

Review.

1F

2

review

Mr Sedgwick has completed his review of the implementation of his recommendations,with a report submitted to the Australian Banking Association (ABA) in June 2021.
ANZ continues to review our processes to ensure we adhere to the Sedgwick
recommendations.

2

The Sedgwick Retail Banking Remuneration Review relates to the ANZ Retail and Commercial business

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ActionRationale

Where we are up to

Accountability, culture and governance
7.

Strengthen our

Through the Royal Commission process we identified that we had

We completed this commitment by strengthening our accountability and consequence

accountability andnot consistently held executives to account for significant failings.

framework. This includes:consequence framework•

The Board receives reports on significant risk, audit and conduct issues, which
are considered when determining end of year performance and remuneration
outcomes.

•

Governance by the Enterprise Accountability Group which is chaired by the
CEO and operates under the delegated authority of the HR Committee.
oDivisional Accountability Groups also meet regularly to review
relevant risk and audit events, code of conduct themes and actions tostrengthen risk behaviours;•

Principles that guide a more consistent approach to consequence
management, including impacts on remuneration;•

Guidance to our leaders on when and how to undertake accountability
reviews; and•Expanded disclosure of senior leader accountability.

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SEPTEMBER 2021
ActionRationale

Where we are up to8.

Commissioner Hayne’s recommendation 5.6 was that we should:

We are continuing to act on this by:

Culture audits and acting
on identified problems•

assess our culture and governance;•

identify and deal with any problems with that culture andgovernance; and••Monitoring culture metrics and implementing initiatives to support the shift toour desired culture (e.g. building leadership capability in change);•

Conducting culture reviews by Internal Audit and acting on problems identified.

determine whether the changes made have been

Follow up reviews determine the effectiveness of actions undertaken and theeffective.

impact on cultural shift;

3

2F

•

Improving how we listen to our people so that they have different ways to‘speak up’, including more regular surveys; and•Improving our approach to managing Risk Culture to enable our Executive
Committee and Board to monitor progress towards the desired state.

9.

Allocate specificCommissioner Hayne’s recommendation 1.17 was that APRAThe Government has consulted on the extension to BEAR, to be known as the

responsibility to our BEAR

should require banks to have a responsibility under the Banking

Financial Accountability Regime (FAR). We will complete these commitments when

executive(s) for our

Executive Accountability Regime (BEAR) for all steps in thelegislation to enact the FAR commences.

products and complaints

design, delivery and maintenance of all products and any

about them

remediation.

10. Make our BEAR

The Government’s response to Commissioner Hayne’s

executives explicitly

recommendations 6.6, 6.7 and 6.8 stated that it will introduce a

responsible for preventing

regime similar to BEAR for non-prudentially regulated entities

conduct that harms

focused on conduct. This would be administered by ASIC.

Before then, our executives must act with honesty and integrity, and with due skill, careand diligence and their accountability statements set out requirements for them to:•Develop and maintain open and transparent relationships with all regulators(including ASIC where applicable); and•Be accountable for the products they offer to their customers and complaints
about them.

customers

3

We recognise that recommendation 5.6 requires the ongoing review of our culture

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ActionRationale

Where we are up to
See above

11. Require our BEAR
executives to be open,
constructive andcooperative with ASIC
Remediation
12. Publicly report on how we

The appropriateness and timing of remediation was subject to

We completed this commitment by publicly reporting on our progress on ourare fixing our significant

significant attention through the Royal Commission process.

remediations in both our half- and full-year reporting suite.

The principles are aimed at giving customers transparency about

We completed this commitment by implementing Dispute Resolution Principles,on managing complaints

how we will treat their complaint against us and, if legal

incorporating model litigant guidelines.

and disputes from retailproceedings cannot be avoided, act fairly in them.

failures
Dispute resolution
13. Commit to public principles

and small businesscustomers

The principles apply to our people and our representatives (e.g. external law firms)
when managing individual retail and small business customer complaints, disputes andlitigation in Australia. 4 These principles have informed the complaint awareness training
3F

undertaken by staff across the Australia Retail & Commercial division.
In addition, in December 2020 we published our ‘ANZ Complaint Guide’ for customers
on anz.com. 5 We have made this guide available in a number of languages so that it is
4F

accessible to our non-English speaking customers.

4
5

Refer https://www.anz.com.au/content/dam/anzcomau/pdf/dispute-resolution-principles.pdf
Refer https://www.anz.com.au/content/dam/anzcomau/documents/pdf/support/complaints/anz-complaint-guide-en.pdf

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ActionRationale

Where we are up to

14. Commit to the Australian

The Government’s response to Commissioner Hayne’s

We completed this commitment by establishing a dedicated team responsible forFinancial Complaints

recommendation 7.1 required AFCA to consider disputes dating

investigating legacy complaints lodged with AFCA.

Authority’s ‘look back’

back to 1 January 2008.

AFCA closed its legacy program to new complaints on 30 June 2020.

Financial advice
Commissioner Hayne’s recommendation 2.1 was for several

We have completed this commitment. Following the enactment of the Financial Sector

ongoing financial advice tochanges to the law concerning ongoing fee arrangements in

Reform (Hayne Royal Commission Response No. 2) Act 2021 (Cth), all requirements

customers so they always

response to the “fees for no service” failures

were in place prior to 1 July 2021.

Commissioner Hayne’s recommendation 2.2 was that the law be

We completed this commitment by amending our disclosure documents to advise ourwriting of areas where ourchanged to require personal financial advisors to give clients acustomers where our financial advisors may not be independent, impartial or unbiased.

financial advisors may not

written statement explaining simply and concisely why the adviser

be independent, impartial

is not independent, impartial and unbiased (if that is the case).

15. Focus on how we provide

get the service they pay forand value
16. Tell our customers inor unbiased

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SEPTEMBER 2021

enforceable provisions of the Banking Code of Practice

CHART 1: PROGRESS WITH ROYAL COMMISSION
RECOMMENDATIONS
Overall•

Forty-one of the Royal Commission’s 76 recommendations are assessed
as directly applicable to ANZ. Of these, we have completed actions
relevant to eleven recommendations, including the four directed at banks
for direct implementation. Work relevant to 13 recommendations isunderway. The remaining 17 recommendations require actions by
Government or the ABA before we take any further steps.

•o

Recommendations 1.17, 6.6, 6.7 and 6.8, which concern reforms
to the BEAR that will be effected through the FARoRecommendation 7.1, which concerns the establishment of acompensation scheme of last resort

Of these 17 recommendations, we have taken independent action to
respond to recommendation 1.11 (concerning farm debt mediation). This iscovered in our commitment 4.3, discussed above.

Status of ANZ Response

Work underway•

The 13 recommendations on which work is underway are primarily
addressed through the Financial Sector Reform (Hayne Royal
Commission Response) Act 2020 (Cth). These include:o

Recommendations 3.4 and 4.1, which concern hawking offinancial products;oRecommendations 1.6 and 2.7, which concern reference checking
for mortgage brokers and financial advisors; andoRecommendations 2.8 and 7.2, which concern breach reporting.

The commencement dates of these reforms set by Parliament are in
October 2021.
•

We are also working to implement APRA’s response to recommendations
5.1, 5.2 and 5.3. This response is contained in the recently finalised
Prudential Standard CPS 511 Remuneration. For ANZ, this standard willcommence on 1 January 2023.

External Action Needed•

The 17 recommendations that require action by external parties relate tovarious matters. These include:o

Recommendations 1.3, 1.4, 2.3, 2.6, 7.3 and 7.4, which all involve
further Governmental reviewsoRecommendation 1.16, which concerns the ABA identifying
10