30 APRIL 2020
ROYAL COMMISSIONUPDATE
IMPLEMENTATIONOF HAYNE
RECOMMENDATIONS

30 April 2020

UPDATED 6 MAY 2020
Refer footnote 1

IMPLEMENTATION OF HAYNE ROYAL COMMISSION RECOMMENDATIONSThis overview provides an update on ANZ’s progress in implementing the recommendationsof the Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry (Royal Commission) as at 30 April 2020. It also provides a summary of
our remediation work to date.
OVERVIEW OF ROYAL COMMISSION IMPLEMENTATION
We have been determined to take action on both the spirit and the letter of the Royal
Commission. ANZ has made the changes that it can to respond to the fourrecommendations that Commissioner Hayne directed at banks (recommendations 1.14,
5.4, 5.5 and 5.6).1 In relation to these recommendations, ANZ has:•

Changed how we pay people across the ANZ Group to reduce the risk of outcomesthat are not in our customers’ best interests. We have replaced individual
performance-based bonuses with a Group performance-based bonus forapproximately 80% of employees and reduced the emphasis on variable remuneration(recommendation 5.4)•

Implemented all 15 Sedgwick Review recommendations that can be implemented byindividual banks at this time (recommendation 5.5)2•

Strengthened ANZ Group Board and management oversight particularly in relation toaccountability and governance, and introduced new Accountability and Consequence
Principles (recommendation 5.6)•

Published principles about how we will treat family farmers in financial distress,
including a position that enforcement is a measure of last resort after otherreasonable options have been explored (recommendation 1.14).3

Since our November 2019 update, we have implemented the remainder of the Sedgwick
Review recommendations that can be addressed by individual banks at this time.
These changes are part of the wider ANZ response to the Royal Commission. On 20
February 2019, we announced sixteen commitments responding to a number ofCommissioner Hayne’s recommendations and comments, and our understanding of what
the community expects of us following the Commission.
Our progress against the four recommendations directed at banks is set out in greater
detail below. We also set out below our progress against the recommendations directed at
the Australian Banking Association (recommendation 1.8 – Amending the Banking Code andrecommendation 1.13 - Charging default interest). A fuller accounting of our progressagainst the sixteen commitments we made in February 2019 is set out in the annexure.

An earlier version of this update published on 30 April 2020 stated “ANZ has made the changes that it can torespond to the spirit and letter of the Royal Commission”. We have clarified this statement because five of thesixteen ANZ commitments set out in the Annexure are not completed yet. Of those remaining, Commitment 9, 10
and 11 are dependent on the finalisation of the Financial Accountability Regime; Commitment 15 is dependent on
the finalisation of the draft legislation released by the Australian Government on 31 January 2020; andCommitment 8 is in progress as we continue to assess culture and identify where changes are required. We notethat recommendation 5.6 requires the ongoing review of our culture.
1

2

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

Refer to https://www.anz.com.au/business/industries/agribusiness/farm-debt-mediation-commitment/ The eight
principles apply when managing business lending to family farming customers in financial distress and requiring
the management of our Lending Services team (Australia). ANZ New Zealand Lending Services is also aware ofthese principles and will ensure that it acts in accordance with their spirit and intent.
3Page 2CHANGING HOW WE PAY PEOPLE
Recommendation 5.4 — Remuneration of front line staff

All financial services entities should review at least once each year the design andimplementation of their remuneration systems for front line staff to ensure that the design
and implementation of those systems focus on not only what staff do, but also how they doit.
Recommendation 5.5 — The Sedgwick Review

Banks should implement fully the recommendations of the Sedgwick Review.
OUR RESPONSE
As noted in our previous update on 1 November 2019, ANZ changed how we pay people
across the ANZ Group, effective from 1 October 2019. The October 2019 remuneration
structure:•

Replaces individual performance-based bonuses or other previous arrangements witha Group performance-based bonus for approximately 80% of employees. 4 Around
20% of employees, who have a higher impact on our performance, will continue toreceive bonuses based on business and individual performance in addition to theGroup performance component•

Reduces the emphasis on variable remuneration and increases the emphasis on fixed
remuneration. Around one third of the target variable remuneration pool has shifted
to fixed remuneration•

Bases performance management on ‘How’ we work (ANZ values and leadershipbehaviours for leaders) and ‘What’ we deliver (financial, risk, customer and people),with the two components equally important•

Sets minimum standards of behaviour and performance gateways to determine
eligibility to receive any variable remuneration and applies consequences when
standards are not met.5

The new remuneration arrangements outlined in the first two points do not apply to BEAR
Accountable Persons or other executives whose remuneration may be subject to APRA
regulation.
ANZ undertakes an annual review of the Group Remuneration Policy (including theeffectiveness of our remuneration arrangements), with the most recent annual review
completed in February 2020.

The Group performance-based bonus (‘Group Performance Dividend’) is not a guaranteed payment. It will vary
according to assessed performance taking into account the perspectives of risk and reputation, financial, customer
and people.
4

The 2019 ANZ Annual Report disclosed information on the number of warnings, impacts to performance or
remuneration outcomes and cessation of employment applying to senior leaders and employees. At the seniorleadership level, 30 current or former senior leaders had a formal consequence applied in 2019 for Code of
Conduct breaches or findings of accountability for a material event, or otherwise left the bank after aninvestigation had been initiated. The 30 employees represent ~ 1% of the senior leader population.
5

Page 3In relation to the Sedgwick Review, we have now implemented all 15 recommendations
that can be implemented by individual banks at this time.6
Please refer to Commitments 5 and 6 in the annexure.
STRONGER GOVERNANCE AND ACCOUNTABILITY
Recommendation 5.6 — Changing culture and governanceAll financial services entities should, as often as reasonably possible, take proper steps
to:

assess the entity’s culture and its governance;

identify any problems with that culture and governance;deal with those problems; anddetermine whether the changes it has made have been effective.

OUR RESPONSE
This recommendation requires that banks take ongoing actions to assess and improve theirculture and governance. As noted in our 1 November 2019 update, key actions that wehave taken included:•

Introducing a strengthened Accountability and Consequence Framework in June 2019,
expanded disclosure of senior management consequences and strengthened operationof the Consequence Review Group chaired by the CEO7•

Establishing a Royal Commission and Self-Assessment Oversight Group overseeing an
integrated response to the Royal Commission and APRA Self-Assessment•

Continuing assessment of ANZ’s culture through oversight by the Board and theEnterprise Culture Steering Group. Since our November 2019 update, we haveconducted another six Internal Audit cultural reviews or re-assessments, incorporating
data from 3,442 employees (average 68% completion rate)•

Dedicated part of the Board’s agenda to customer satisfaction, complaints andremediation, regulatory changes impacting customers, and ANZ’s approach tomarketing and specific marketing initiatives•

Promoted a strong ‘speak up’ culture to provide a safe environment for such a culture,and recognition by managers of exemplary risk and audit behaviours.

Since November, we have reviewed the effectiveness of the Accountability andConsequence Framework and, as a result, have increased guidance to our businesses andtheir Divisional Consequence Review Groups; for example, about the matters that require afull accountability review.
ANZ has addressed recommendation 5.6 by establishing processes to assess and improve
our culture and governance. We recognise that this is an ongoing process, and we will

Of the 21 Sedgwick recommendations, six have dependencies on industry or government processes. These relate
to determining customer centric measures (recommendation 5), changes to aggregator, mortgage broker orfranchise remuneration (recommendations 18 and 21), future reviews by the ABA (recommendations 15 and 19),
and the overall implementation deadline (recommendation 1).
67

Refer footnote 4.

Page 4
continue to act on Commitment 8 to ensure we identify and deal with any problems withour culture and governance.8
Please refer to Commitments 7 and 8 in the annexure.
HELPING FAMILY FARMING CUSTOMERS IN FINANCIAL DISTRESS
Recommendation 1.13 — Charging default interest

The ABA should amend the Banking Code to provide that, while a declaration remains inforce, banks will not charge default interest on loans secured by agricultural land in anarea declared to be affected by drought or other natural disaster.
Recommendation 1.14 — Distressed agricultural loans

When dealing with distressed agricultural loans, banks should:

ensure that those loans are managed by experienced agricultural bankers;offer farm debt mediation as soon as a loan is classified as distressed;manage every distressed loan on the footing that working out will be the best
outcome for bank and borrower, and enforcement the worst;



recognise that appointment of receivers or any other form of external administrator
is a remedy of last resort; andcease charging default interest when there is no realistic prospect of recovering theamount charged.

OUR RESPONSE
Recommendation 1.13 was directed at the ABA and was addressed with the revisions to the
Banking Code of Practice that came into effect on 1 March 2020.
As noted in our 1 November 2019 update, to address recommendation 1.14, and to support
the implementation of recommendation 1.13, we have published eight principles. Under
these principles, we:•Will not charge default interest on the customer’s loan facilities if the farmer isfarming in an area that has a drought or natural disaster government declaration in
force

•

Undertake that our Lending Services team has specialist Agri bankers•

Will offer early mediation within 90 days of the banking relationship being managed
by the ANZ Lending Services team. Due to COVID-19, we have temporarily paused
making offers of early farm debt mediation•

Will offer farm debt mediation prior to enforcement action being taken including inStates and Territories where there is currently no legislative scheme•State that we believe that enforcement is a measure of last resort after otherreasonable options have been explored with the farmer and that early engagement isin the best interest of all and will likely result in a better outcome.

In respect of the last element of recommendation 1.14, we have an existing practice thatwhen dealing with distressed farmer loans we do not charge default interest when there is
no realistic prospect of recovering the amount charged.

We note that this paragraph was not included in the update published on 30 April 2020. We have included it tomake our position on recommendation 5.6 clear.
8Page 5
Please refer to Commitment 4 in the annexure.
BETTER PROTECTIONS FOR CONSUMERS
Recommendation 1.8 – Amending the Banking CodeThe ABA should amend the Banking Code to provide that:

banks will work with customers:

who live in remote areas; or

who are not adept in using English,

to identify a suitable way for those customers to access and undertake theirbanking;

if a customer is having difficulty proving his or her identity, and tells the bank thathe or she identifies as an Aboriginal or Torres Strait Islander person, the bank will
follow AUSTRAC’s guidance about the identification and verification of persons of
Aboriginal or Torres Strait Islander heritage;

without prior express agreement with the customer, banks will not allow informal
overdrafts on basic accounts; andbanks will not charge dishonour fees on basic accounts.

OUR RESPONSE
Recommendation 1.8 was directed at the ABA and was addressed with the revisions to the
Banking Code of Practice that came into effect on 1 March 2020. To support theimplementation of this recommendation, we have:•

Established a dedicated Aboriginal and Torres Strait Islander (ATSI) telephone service
that includes a TextMe SMS message to provide identified ATSI customers with adedicated telephone number•

Introduced a new referee form from 1 May 2019 to make it easier for indigenous
customers to prove their identity•

Revised our security questions to make them more relevant and easily understood by
ATSI customers (these revisions took into account feedback from ANZ’s Indigenous
Advisory Group)•

Removed overdrawn and dishonour fees on our Pensioner Advantage account.

Please refer to Commitments 1.1 and 2 in the annexure.

Page 6OUR OTHER ROYAL COMMISSION COMMITMENTS
The annexure sets out other commitments that we made in February 2019. As noted in our
1 November 2019 update, we have:•Contacted consumer credit card customers who are carrying persistent debt andpaying little off to offer lower rate cards or instalment payments to assist them to pay
their debt faster (Commitment 3.1)•

Contacted customers in receipt of eligible Centrelink or Veterans’ Affairs benefits tooffer low-cost basic bank accounts (Commitment 3.2)•

Reported on how we are fixing our significant failures in our Annual Report, including
the nature of the issues and our progress on paying customers back (Commitment
12)•

Released Dispute Resolution Principles, incorporating model litigant guidelines, on 15
April 2019 (Commitment 13)•

Made changes to how we provide financial advice. In May 2019, we announced that
we would cease to offer our ongoing fee financial advice service to new customers andphase it out over 18 months for existing customers (Commitments 15 and 16).

From 1 April 2019, we removed grandfathered commissions in relation to ANZ Financial
Planning (our salaried planners) and are now rebating grandfathered commissions tocustomers.9 Prior to its sale to IOOF Holdings Limited, we wrote to all customers of the
OnePath Superannuation business where grandfathered commissions were being deductedfrom their account. We encouraged them to ensure they were receiving appropriate
services from their financial adviser and remind them that they can advise the fund tocease paying commissions immediately without having to notify their financial adviser.
Colin Neave, former Commonwealth Ombudsman and our first Customer Fairness Adviser(appointed in 2016), was asked to review individual ANZ cases highlighted at the Royal
Commission, taking action where appropriate to resolve matters. Mr Neave has reviewed allcases. ANZ has taken action and responded to the review process.

ANZ has completed the sale of a number of wealth businesses. The sale of ANZ’s life and general insurance
businesses, OnePath Life Limited and OnePath General Insurance Pty Limited, to Zurich Financial Services
Australia Limited completed on 31 May 2019. The sale of ANZ’s Pensions & Investments business to IOOF Holdings
Limited was completed on 31 January 2020. The sale of ANZ’s aligned financial planning businesses to IOOF
Holdings Limited completed on 1 October 2018. ANZ’s remaining wealth businesses including ANZ Financial
Planning and ANZ Lenders Mortgage Insurance have been transferred to the Australia Retail and Commercial
Division.
9Page 7CUSTOMER REMEDIATION
Fair, responsible and efficient customer remediation is a focus for the bank, with significant
investment being made across our Australia Retail and Commercial Division and Wealthbusiness. We have acknowledged the importance of fixing the mistakes of the past andreturning money owed to customers as quickly as possible. As at 31 March 2020:•

We are currently resolving identified fee or interest discrepancies with over 3.7 million
Retail and Commercial customers. To date our Retail and Commercial Responsible
Banking team has remediated over 1.5 million customer accounts and issued refunds
of $134 million10, of which $72 million was paid out to customers in the six months tothe end of March 2020.

•

In Wealth:•

We continue to identify instances of inappropriate advice to customers. Over
10,000 advice cases, spanning more than a decade, have been reviewed



As previously reported, cases relating to ANZ Financial Planning fee for noservice have now been remediated

As part of the sale of the Aligned Dealer Group (ADG) businesses to IOOF
(effective 1 October 2018) responsibility for the remediation of inappropriate
financial advice and fees for no service was retained by ANZ. Management
responsibility for these remediation programs remains with the Wealth
Customer Resolution Team



Across these programs of work (inappropriate advice and fees for no service)
Wealth has reviewed nearly 48,000 cases in total and made payments of$109.4 million as at 31 March 2020. This amount takes into account all of theabove remediation matters, including ANZ Financial Planning fees for noservice (GOLD) which is pre-2017. It also includes payments made tocustomers of the ADG related matters.11

Across ANZ, there are over 1,000 people progressing remediation activities

•

10





At the end of March 2020 our Australian Retail and Commercial Responsible
Banking team had increased the number of people working on large scalecustomer remediation matters to over 320

More than 57012 people throughout the Australian Retail and Commercial
business are also working on a number of smaller customer remediations,
fixes and investigations



The dedicated Wealth team now maintains around 170 people to support
remediation matters.

We continue to deliver an internal education program to share ‘lessons learnt’ and tohighlight the impacts on customers when we fail. We are seeking to build a collective

In certain instances ANZ makes:


a community service payment in lieu of a payment to a customer account (at March 2020, charity
payments were made for ~129,000 accounts totalling ~$437,000); or

the customer payment via cheque (at March 2020 cheques were issued for ~260,000 accounts totalling~$26 million. A proportion of these cheques remain unpresented).

11

These numbers include remediation projects ANZ is currently performing on behalf of IOOF Holdings Limited.

12

Figures correct as at 29 February 2020

Page 8understanding of the root causes and shared accountability for the prevention of
future issues.
Previously we reported that the cumulative total cost of remediation over the period from2017 to 2019 was $1,579 million (Wealth discontinued operations component of thisamount was $422 million and continuing operations component of this amount was $1,157
million). During the 6 months ended 31 March 2020 ANZ announced a further charge of$253 million (Wealth discontinued operations component of this amount was $124 million
and continuing operations component of this amount was $129 million).
CONCLUSION
ANZ has completed the implementation of Royal Commission recommendations that weredirected at banks.13 We will act to implement further reforms swiftly and effectively when
the legislative, regulatory and industry implementation of Royal Commission reforms
resumes.

An earlier version of this update published on 30 April 2020 stated “ANZ has completed the implementation ofRoyal Commission recommendations that are able to be implemented by banks”. We have amended this sentence
for the same reason provided in Footnote 1.
13

30 April 2020

ANNEXURE – ANZ ROYAL COMMISSION COMMITMENTS
These sixteen commitments were made on 20 February 2019 in response to the release of the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry.
Commitment

Why we made the commitment

Where we are up to

Retail customers
1.

Make our products fairer and better matched to our customers by:
1.1.

Removing

Commissioner Hayne’s recommendation 1.8 was that theoverdrawn andAustralian Banking Association (ABA) should amend the Banking

dishonour fees on

Code of Practice 2019 (Banking Code) to, among other things,

our Pensioner

provide that banks:

Advantage account

Recommendation 1.8 was addressed with the ABA revisions to the Banking Code ofPractice that came into effect on 1 March 2020.
Informal overdrafts on basic accounts: ANZ does not load overdraft limits on ANZ

Without prior express agreement with the customer, will
not allow informal overdrafts on basic accounts; andWe have completed this commitment.

Will not charge dishonour fees on basic accounts.

Access Basic and Pensioner Advantage accounts and this continues to be the case.
Circumstances where it is not reasonably possible or practical to prevent an accountfrom becoming overdrawn are considered by the revised Banking Code of Practice.
Dishonour fees on basic accounts: We have completed this commitment by removing
the overdrawn and dishonour fees on our Pensioner Advantage account.

1.2.

Accelerating work

In response to the Royal Commission’s Final Report, theOur work on how we design and sell our products and the use and value whichon how we design

Government agreed to extend the design and distribution

customers get from them includes programs to contact customer groups who may

and distribute

obligations in the Treasury Laws Amendment (Design andbenefit from alternative arrangements (see commitments 3.1 and 3.2 below).

products so that

Distribution Obligations and Product Intervention Powers) Bill

customers get

2018 to products regulated by the National Consumer Credit

products that meet

Protection Act 2009 (Cth) and the Australian Securities andtheir needs

Investments Commission Act 2001 (Cth). This amendment

A dedicated project team has been formed and commenced work on how best to
implement the design and distribution obligations, including in light of draft guidancefrom the Australian Securities and Investments Commission released in December
2019.

passed in 2019. The design and distribution obligations in the newPart 7.8A of the Corporations Act 2001 (Cth) will commence inApril 2021.
1

30 April 2020
Commitment
2.

Why we made the commitment

Where we are up to

Improve our service to Aboriginal and Torres Strait Islander customers in remote communities by:
Commissioner Hayne encouraged banks, at page 93 of theWe have completed this commitment by establishing a dedicated Aboriginal & Torres

dedicated phone

Royal Commission’s Final Report, to develop a telephone service

Strait Islander Telephone service from 1 May 2019.

service that will help

to assist Aboriginal and Torres Strait Islander peoples (and others

Aboriginal and Torres

living in remote areas) to access their banking.

2.1. Setting up a

The service is staffed by bankers trained in indigenous cultural awareness and assisting
vulnerable customers.

Strait Islandercustomers manage
their banking
Commissioner Hayne’s recommendation 1.8 was that the ABA

Recommendation 1.8 was addressed with the ABA revisions to the Banking Code of

Torres Strait Islander

should amend the Banking Code to provide that, among other

Practice that came into effect on 1 March 2020.

customers easierthings, if a customer is having difficulty proving his or her identity,

options to prove theirand tells the bank that he or she identifies as an Aboriginal or

identity when opening

Torres Strait Islander person, the bank will follow AUSTRAC’sand using a bankguidance about the identification and verification of persons of

Our security questions have also been revised to make them more relevant to, andaccount

Aboriginal or Torres Strait Islander heritage.

easily understood by, Aboriginal & Torres Strait Islander customers. These revisions

2.2. Giving Aboriginal andWe have completed this commitment by introducing a new referee form from 1 May
2019, which makes it easier for indigenous customers to prove their identity.

took into account feedback from ANZ’s Indigenous Advisory Group.
In addition, in December 2019 we implemented a new process to support on-boarding
new to bank Aboriginal & Torres Strait Islander customers. This process enables
customers to complete KYC remotely by providing a completed statement by referee
via email.

2

30 April 2020
Commitment
3.

Why we made the commitment

Where we are up to

Contacting

These commitments, which build on in-train work, go to the spirit

We have completed this commitment by establishing a process to contact credit card

consumer creditof Royal Commission process and Final Report. We believecustomers who are carrying persistent debt. We provide these customers financial

card customers whothat it is a community standard and expectation that we assist our

education on how credit cards work and offer assistance plans to help them to pay their

are carrying

customers to benefit from our products where we can. We aredebt faster.

persistent debt andconscious that we must also take our customers’ choices into

paying little off toaccount when we undertake this type of work.

Help customers by:
3.1.

get them on to lower
rate cards andassist them to pay

As at 25 March 2020 we had contacted 18,195 customers, with 4,966 customers
responding to our contact. Of those contacted 1,440 customers accepted the offer totransfer to an instalment plan at a reduced interest rate of 7%. A further 1,397
customers appreciated the financial education provided while the remaining 2,115
customers chose to take no action.

their debt faster
The program was paused on 19 March 2020 to enable ANZ to respond to COVID-19
with support for our customers. This includes support for credit card customers who areworried about managing their credit card debt.
The original program will be reassessed once the situation has settled and we haveconsidered what adjustments to the program are required to ensure we continue tosupport our customers.

3

30 April 2020
Commitment
3.2.

Why we made the commitment

Where we are up to

Contacting

We have completed this commitment by establishing a process to contact customers incustomers in receipt

receipt of eligible Centrelink or Veterans’ Affairs benefits to offer them a move to a low-of eligible Centrelink

cost basic bank account.

or Veterans’ Affairs

As at 19 March 2020, we had contacted 290,791 customers, with 10,296 customers

benefits to help

taking up the offer to open a concession account. Further investigation has shown thatthem move to low-

approximately 70% of customers are unlikely to experience a benefit from moving to a

cost basic bankbasic bank account as they are currently not paying any fees on their account, or are

accounts

utilising an overdraft feature not available in the basic bank account.
The program was paused on 19 March 2020 to enable ANZ to swiftly respond to
COVID-19 with support for our customers, with options that can help our customers
through these uncertain times.
The original program will be reassessed once the situation has settled and we haveconsidered the implications of recent events and whether any adjustments to theprogram are required.

Farming customers
4.

Publish clear principles on how we help farmers including through:We have completed this commitment by publishing principles outlining the assistance
we offer to family famers in financial distress. The relevant elements of these principles
are outlined below.

4.1.

Not charging

Commissioner Hayne’s recommendation 1.13 was that the ABA

Recommendation 1.13 was addressed with the ABA revisions to the Banking Code offarmers default

should amend the Banking Code to provide that, while a

Practice that came into effect on 1 March 2020.

interest in areas

declaration remains in force, banks will not charge default interest

In our principles, we undertake to not charge default interest on a farmer’s loan facilities

declared to beon loans secured by agricultural land in an area declared to beaffected by drought

affected by drought or other natural disaster.

if they are farming in an area subject to a drought or natural disaster government
declaration.

or other natural
disasters
4

30 April 2020
Commitment
4.2.

Why we made the commitment

Where we are up to

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, partly, require that internal

approval process.

process

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

4.3.

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

In our principles, we undertake that we will offer early mediation to a farmer within 90

access to farm debt

when dealing with distressed agricultural loans, should (amongdays of the banking relationship being managed by our Lending Services team. Due tomediation if they getother things):

COVID-19, we have temporarily paused making offers of early farm debt mediation.

into difficulties and

Offer farm debt mediation as soon as a loan is classified

Before we participate in early mediation, we will inform farmers of their right, as an

as distressed; andalternative, to make a complaint to the Australian Financial Complaints Authority

supporting anational scheme offarm debt mediation

Manage every distressed loan on the footing thatworking out will be the best outcome for bank and4.4.

Reinforcing ourpreference forworking out
difficulties over
enforcing
agricultural loans or

borrower, and enforcement the worst.

(AFCA).
The principles also set out that we:

support a national farm debt mediation scheme and will always offer farm debt

Commissioner Hayne’s recommendation 1.11 was that a

mediation prior to enforcement action being taken, including in states andnational scheme of farm debt mediation should be enacted.

territories where there is currently no legislative scheme; and

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

appointing an
external manager

530 April 2020
Commitment

Why we made the commitment

Where we are up to

Redesign how we manage

Commissioner Hayne’s recommendation 5.4 was that all

We completed this commitment in 2019 by changing the way we financially reward andand reward our people tofinancial services entities should review at least once each year

manage the performance of our people. These changes include replacing bonuses forbetter focus on thethe design and implementation of their remuneration systems forthe vast majority of employees based on their individual performance with an incentive

interests of our customers,

front line staff to ensure that the design and implementation of

based on the overall performance of the ANZ Group. We complete an annual review ofthe long-term health of thethose systems focus on not only what staff do, but also how they

the Group Remuneration Policy, including the effectiveness of our remunerationbank and team, rather than

do it.

arrangements.

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 Mr

should implement fully the recommendations of the Sedgwick

are being managed at the industry level.

Stephen Sedgwick,

Review.

Remuneration
5.

individual, outcomes
6.

Recommendations that have industry action dependencies or are directed at the ABA

including by responding to

are: 1 – implementation of all recommendations as quickly as possible with completionany observations on how

by 2020; 5 – development of customer centric measures; 15 – independent review in

we can improvethree years; 18 – reform of broker remuneration; 19 – consideration of Australian
Securities and Investments Commission powers in the three year independent review;and 21 – examination of franchisee governance and remuneration.

6

30 April 2020
Commitment

Why we made the commitment

Where we are up to

Accountability, culture and governance
7.

Strengthen our

Through the Royal Commission process, we identified that we

We have completed this commitment by strengthening our accountability framework.

accountability andhave not consistently held executives to account for significant

This has included the development of:consequence framework

failings. This commitment responds to the spirit of the Royalso that when things go

Commission process and Final Report that strong executive

wrong, we fix them andaccountability is needed to meet community standards andconsistently holdexpectations.

executives to accountConsequence management principles that guide a more consistent approachto consequence management across the bank, including impacts on
remuneration

Accountability principles that define the various categories of accountability(e.g. direct, indirect, collective)

Accountability review guidance to guide our leaders on when and how toundertake accountability reviews

Expanded disclosure of senior leader accountability.

Our focus now is the ongoing effectiveness of our framework under the oversight of ourConsequence Review Group. This is chaired by our Chief Executive Officer.
8.

Supplement existing

Commissioner Hayne’s recommendation 5.6 was that all

culture audits and ensure

financial services entities should, as often as reasonably possible,

we act on identified

take proper steps to:

problems

assess the entity’s culture and its governance;

identify any problems with that culture and governance;deal with those problems; anddetermine whether the changes it has made have been

We are continuing to act on this commitment including by:Acting on problems identified in cultural reviews conducted by our Internal
Audit function

Having established an Enterprise Culture Steering Group that meets semiannually to understand cultural strengths and concerns, as well as actions
directed at cultural improvement

effective.



Exploring how we can give our leaders feedback on their strengths anddevelopment areasTesting a new framework for understanding and improving our culture.

7

30 April 2020
Commitment

Why we made the commitment

Where we are up to

9.

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

responsibility to our BEAR

should require banks to have a responsibility under the Banking

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

executive(s) for our

Executive Accountability Regime (BEAR) for all steps in thewhen the law changes for FAR are enacted.

products and complaints

design, delivery and maintenance of all products offered toabout themcustomers by the bank and any necessary remediation of

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:customers in respect of any of those products.

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.

Develop and maintain open and constructive relationships with all regulators(including ASIC where applicable); andBe accountable for the products they offer to their customers and complaints
about them.

customers
11. Require our BEAR
executives to be open,
constructive andcooperative with theAustralian Securities andInvestments Commission

8

30 April 2020
Commitment

Why we made the commitment

Where we are up to

12. Publicly report on how we

The appropriateness and timing of remediation activities of banks

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

was subject to significant attention through the Royal Commission

remediations at both our half- and full-year reports.

failures, including theprocess. We believe that transparency concerning our

nature of the issues andremediation projects is needed to meet community standards

our progress on paying

and expectations.

Remediation

customers back. This will
include the remediations
identified at the Royal
Commission. Thistransparency will add toour commitment to fix
failures fairly and quickly in
our Remediation
Principles1

1

ANZ’s Remediation Principles are set out on page 9 of ANZ’s 2018 Annual Review. The 2018 Annual Review is available at: https://shareholder.anz.com/sites/default/files/anz_2018_annual_review_final.pdf

930 April 2020
Commitment

Why we made the commitment

Where we are up to

Dispute resolution
13. Commit to public principles

We are conscious that when our retail and small businessWe have completed this commitment by releasing Dispute Resolution Principles,on managing complaints

customers have a complaint against us, or we have a dispute withincorporating model litigant guidelines, on 15 April 2019. The Principles were reviewed

and disputes from retailthem individually, we have access to more legal resources thanand updated in November 2019 and are available on anz.com.3

and small businessthey do. The principles (which were referred to in our 2018

customers and acting as

Sustainability Report) are aimed at giving customers more comfort

a model litigant if we end

that we will treat their complaint against us with respect and, if

up in court with themlegal proceedings cannot be avoided, act fairly in them.2

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.

individually
14. Commit to the AustralianFinancial Complaints
Authority’s ‘look back’

The Government’s response to Commissioner Hayne’s

We have completed this commitment by establishing a dedicated team responsible forrecommendation 7.1 indicated that it will require AFCA toinvestigating legacy complaints lodged with AFCA and note that customers canconsider disputes dating back to 1 January 2008.

under its new limits,appoint our Customer
Advocate to lead this workand fully cooperate with
AFCA as it resolves
disputes2
3

continue to register legacy matters with AFCA until 30 June 2020. ANZ remains
committed to engaging constructively with AFCA and customers who raise historical

Commissioner Hayne’s recommendation 4.11 was that the law

complaints under the AFCA Legacy program.

should be changed to require that licence holders take reasonable
steps to cooperate with AFCA in its resolution of particular
disputes, including, in particular, by making available to AFCA all
relevant documents and records relating to issues in dispute.

Refer https://www.anz.com/content/dam/anzcom/shareholder/au22289_anz_sustainability_review_2018_fa_online.pdf
Refer https://www.anz.com.au/content/dam/anzcomau/pdf/dispute-resolution-principles.pdf

10

30 April 2020
Commitment

Why we made the commitment

Where we are up to

Financial advice
Commissioner Hayne’s recommendation 2.1 was for several

We announced in May 2019 that we will no longer offer the Prime Access financial

ongoing financial advice tochanges to the law concerning ongoing fee arrangements

advice service to new customers and will phase it out entirely for current customers

customers so they always(including that such arrangements must be renewed annually byover the next 18 months. The Prime Access financial service was formerly offered on

get the service they pay forthe client and record in writing each year the services that the

an ongoing fee basis. Existing customers are already required to opt-in annually to any

and valueclient will be entitled to receive).

existing ongoing fee arrangements.

15. Focus on how we provide

On 1 October 2019 a new delivery model commenced under which advice and services
are provided to customers based on what they value and paid for after receipt of theservice.
Note: On 31 January 2020, the Australian Government released draft legislation for
public comment that related to a number of Royal Commission recommendations. The
draft legislation would impact the requirements for both Commitments 15 and 16. ANZ
has been working towards delivering these commitments ahead of formal legislation
and we are well positioned to deliver by the proposed timeframe should this draft
legislation formalise and pass.
16. Tell our customers in

Commissioner Hayne’s recommendation 2.2 was that the law be

writing of areas where ourchanged to require personal financial advisors to give clients afinancial 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).

We have completed this commitment by amending our disclosure documents.

or unbiased

11