21 AUGUST 2020

ROYAL COMMISSION
RECOMMENDATIONS
AND ANZ ACTIONSROYAL COMMISSION RECOMMENDATIONS AND ANZ ACTIONSANZ is responding to the ‘spirit’ and the ‘letter’ of the Royal Commission.
••••

We announced sixteen commitments in February 2019 responding to a number of Commissioner Hayne’s recommendations and comments.
These were made to improve the treatment of retail customers, small businesses and farmers in Australia. They picked up on work alreadyundertaken or started in Australia as well as adding new reforms to past initiatives.
Our progress as at 21 August 2020 on these is set out below.
The progress includes action in relation to distressed agricultural loans, remuneration of front line staff, the Sedgwick Review, and culture andgovernance. These 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 and regulator responses.
ANZ continues to engage with Government, the regulators and industry as they progress their response to the Royal Commission
recommendations.

ActionRationale

Where we are up toRemoving

Commissioner Hayne’s recommendation 1.8 was that theWe 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•

1.2.

Will not charge dishonour fees on basic accounts.

Accelerating work

The design and distribution obligations in the new Part 7.8A of the

Our work on how we design and sell our products and the use and value whichon how we design

Corporations Act 2001 (Cth) were expected to commence in April

customers get from them includes programs to contact customer groups who mayand distribute2021.

benefit from alternative arrangements (see commitments 3.1 and 3.2 below).

products so that
customers get
products that better

A dedicated project team continues to implement the design and distribution
obligations, which now come into effect in October 2021.

meet their needs
1Action2.

Rationale

Where we are up toImprove 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 theWe 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 a process to contact and offer

credit cardthem manage and reduce their debt and banking costs.

assistance to credit card customers who are carrying persistent debt.

customers who arecarrying persistentdebt

The customer contact program was paused on 19 March 2020 to enable ANZ torespond to COVID-19 with support for our customers.
Credit card debt reduction options offered to customers include transferring to a productwith lower interest rates, reducing credit limits, and repayment plans.

3.2.

Help eligible

We completed this commitment by establishing a process to contact customers incustomers move to

receipt of eligible Centrelink or Veterans’ Affairs benefits to offer them a move to a low-low-cost basic bankcost basic bank account.

accounts

The customer contact program was paused on 19 March 2020 to enable ANZ torespond to COVID-19 with support for our customers. The program was resumed on 22
July 2020.

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ActionRationale

Where we are up toFarming 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. 10F

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.

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 governmentdeclaration.

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 beindependent of loan origination, loan processing and loan decision
processes.

4.3.

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

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.

In our principles, we undertake that:•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. Due to COVID-19, we
have temporarily paused making offers of early farm debt mediation.

farm debt mediation

1

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

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Action
4.4.

Rationale
Reinforcing ourpreference forCommissioner Hayne’s recommendation 1.11 was that aWhere we are up to•national scheme of farm debt mediation should be enacted.

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);

working out•

difficulties overWe support a national farm debt mediation scheme and will always offer farmdebt mediation prior to enforcement action being taken; andenforcing•

agricultural loans or

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

external manager
Remuneration
5.

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. Performance considers ‘How’ we work (our values andbetter focus on thethe design and implementation focuses on not only what staff do,

behaviours) and ‘What’ we deliver. These changes reduce the emphasis on variableinterests of our customers,

but also how they do it.

pay and include replacing bonuses for the vast majority of employees with an incentive

the long-term health of thebased on the overall performance of the ANZ Group.

bank and team, rather than

We complete an annual review of the Group Remuneration Policy, including theindividual, outcomes6.

effectiveness of our remuneration arrangements.

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

We completed this commitment, with the exclusion of those recommendations that arerecommendations of theshould fully implement the recommendations of the Sedgwick

being managed at the industry level.

Sedgwick remuneration

Review. 2
1Freview

2The Sedgwick Retail Banking Remuneration Review relates to the ANZ Retail and Commercial business

4Action

Rationale

Where we are up to

Accountability, culture and governance
7.

Strengthen ourThrough the Royal Commission process we identified that weWe completed this commitment by strengthening our accountability and consequence

accountability andhave not consistently held executives to account for significant

framework. This includes:consequence framework

failings.

•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•
8.

Culture audits and acting
on identified problems

Commissioner Hayne’s recommendation 5.6 was that we should:

We are continuing to act on this by:•assess our culture and governance;•

Conducting culture reviews by Internal Audit and acting on problems identified;•identify and deal with any problems with that culture and•Reviewing cultural strengths and weaknesses, as well as actions directed atgovernance; and•3cultural improvement;

determine whether the changes made have been•

Testing a new framework for understanding and improving our culture; andeffective. 3•

Encouraging a strong ‘speak up’ culture.

2F

9.

Expanded disclosure of senior leader accountability.

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 legislation to enact the FAR is passed.

products and complaints

design, delivery and maintenance of all products and any

about them

remediation.

We recognise that recommendation 5.6 requires the ongoing review of our culture5ActionRationale

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 aresponsible for preventing

regime similar to BEAR for non-prudentially regulated entities

conduct that harms

focused on conduct. This would be administered by ASIC.

customers

Where we are up to
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 constructive relationships with all regulators(including ASIC where applicable); and•Be accountable for the products they offer to their customers and complaints
about them.

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 publically 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. 43F

4Refer https://www.anz.com.au/content/dam/anzcomau/pdf/dispute-resolution-principles.pdf

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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.

Financial advice
15. Focus on how we provide

Commissioner Hayne’s recommendation 2.1 was for several

ongoing financial advice tochanges to the law concerning ongoing fee arrangements incustomers so they always

response to the “fees for no service” failures

get the service they pay for

Note: the Government deferred the implementation of some related Royal Commissioncommitments due to COVID-19. ANZ has been working towards delivering thesecommitments, where practicable, ahead of formal legislation.

and value
16. Tell our customers in

We stopped offering financial advice service on an ongoing fee basis.

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 completed this commitment by amending our disclosure documents.

or unbiased

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