An ASIC investigation has found that the major bank failed to “provide documented annual reviews to more than 10,000 ‘Prime Access’ customers in the period from 2006 to 2013”, according to a statement.
According to the statement, the enforceable undertaking requires ANZ to:
- pay a “community benefit payment” of $3 million;
- provide an “audited attestation” from the bank’s senior management to demonstrate “reasonable assurance” that the bank has provided documented annual reviews to entitled customers since 2004; and
- provide other “audited attestations” from bank management that it has made improvements to compliance systems and processes, and that the improvements have been implemented to provide documented annual reviews in accordance with the ANZ ‘Prime Access’ package.
Commenting on the enforceable undertaking, ASIC deputy chair Peter Kell said the regulator considered it “critically important” that systems and processes were improved to prevent the reoccurrence of breaches of trust.
“Our report into Fees For No Service in October 2016 identified the major financial institutions’ systemic failures in this area, which required affected customers to be fairly compensated and to be provided with the services that they have paid for,” Mr Kell said.
“This enforceable undertaking with ANZ will deliver on that commitment.”
On top of the enforceable undertaking, ANZ will compensate Prime Access customers who did not receive documented annual reviews they were entitled to between 2006 and 2013.
ANZ will have to pay $46.85 million in compensation to these customers, $46.81 million (including earnings) of which has already been paid.
‘Fees for no service’ conduct will be the first item of order for the next round of hearings at the royal commission.
Confirming the enforceable undertaking, ANZ group executive, wealth, Australia Alexis George said the bank had apologised to the affected customers.
“We acknowledge we did not meet customers’ expectations by not providing them the services we promised,” Ms George said.
“We have since introduced measures to prevent this from happening again and have largely completed making remediation payments to impacted clients.”
Accountants charge $300 for 15min meetings which a tick and flick boxes for simple processes. Planners now have to go through so much paperwork to do simple things just crazy just to be compliant and people wonder why we have to charge so much well i’m sorry but nothing is free. I don’t think financial planners are getting a fair go we do far more good for people than we are given credit for. Has anyone seen what Industry funds charge and they can’t even recommend more than one option template, template, template. I have to do a new report for every single client because everyone has difference goals and objectives, health issues, asset issues, estate planning factors which we help facilitate with lawyers and accountants. very easy for people to throw one liners out there….
When a relatively new retiree is loses sleep due to volatility and an experienced adviser can read their body language and can see the clients are very stressed, even though the allocations are within their risk profile and we spent 2 hrs developing that risk profile, maybe 6 months earlier, and we spend another 2 hrs talking through the concerning issues they have, and the body language starts to become relaxed, the facial frowns disappear , they become very relaxed and actual smile n have a laugh, and all we did is talk, and they express their sincere gratitude and they they feel so much more relaxed at ease and comfortable and they tell me they feel much better after the meeting , Tell me, what is that worth$$$. Suffice to say My clients don’t raise issues about what we charge , but we do spend a lot if time helping them become informed, informed people make better decisions
That’s a lame excuse for charging thousands of dollars sorry year in year out.
you either aren’t a adviser nor have you sat down with an adviser and gone through these issues, or you are a client that has had a bad experience and you want to tar everyone with the same brush. so what do think advisers should do and what do you think they should charge. sounds like to me you have no idea what you are on about.
I agree totally Steve, have a chat, tell them to stay the course and clip the ticket for a few thousand. What a load of crap. Would want to be offering a lot more than that to justify hefty ongoing advice fees when in fact if they just did nothing and didn’t see an adviser annually wouldn’t be any worse off.
I see our advisers all the time doing no change ROA year in year out for age pension clients that already have annuity and income streams in place and offer no real value at all other than good company which is worth something to the client for peace of mind but not thousands of dollars for clients that have 300-400k in savings.
Its worth whatever a client is willing to pay for it. As long as they know their paying for it and your actually doing it.
The issue at ANZ, and many others across both the aligned and independent sphere, is when no such meetings happen and the client still gets charged!
Exactly, but what input does the client get in negotiating fees. It’s always 1% or 3300 per annum and vast majority offer one review for that.
Sooner industry goes to hourly rate the better and paid outside super
As the Chief Executive and VP of Sell More or your Fired at ANZ Australasia I would like to today publicly announce it’s not ANZ…. it’s all youse evil scum bag planners out there and the solution is to have a Degree and join the FPA.
We are more than happy to pay for their FPA or AFA membership fees plus we’ll avoid a Royal Commission. We can’t possible supervise all these scum bags, I mean planners, and so it’s individuals planners and nothing to do with me. The Solution is a Degree for all you scum bag planners. Now I’m off to sack a few advisers who can’t sell Ice to an Eskimo and give the FPA a big wad of cash so that they’ll agree wholeheartedly with me. Who knows they’ll even call a Royal Commission madness and agree with my course of action and so all you scum bags out there can run away and get FASEA’d. Off you go now all settled and nothing to see here.
I agree with the above comment by SD. Steven, unfortunately you appear to have dealt with someone who didn’t provide you with value for money. But surely your statement would be like saying due to a few crook lawyers, doctors or accountants all of them are crooks? I clearly articulate what the cost of the service offering is and provide regular reviews to all my clients, this is the industry standard. Gone are the days of trails without service.
Hello FPA…. this is one of your members. ANZ pays money to you and you bundle it up as membership fees. They also pay fees to have a direct influence on policy direction and they help shape the direction of advice in Australia according to your website. I’ll await to see how you treat this member.
Hello FPA members this is the firm that is helping to shape the direction of Advice in Australia. Are you happy with this arrangement?
As someone who has recently entered the industry in a supporting role, I’m having a really, really difficult time coming to terms with the fees charged. I love working in the industry – in my short time as a part of it I feel as though I’ve been able to play a part in genuinely improving peoples lives. Seeing people save hundreds/thousands per year by choosing a provider with lower fees, helping elderly clients increase their aged pension entitlements and seeing people be able to bring forward their retirement dates is honestly heartwarming.
But I’m still left wondering how advisers justify their fees? If two clients – one with $250k and the other with $1 million – are both being charged the same ongoing service fee of say 1%.. Is it honestly justifiable that they will fork out $2.5k and $10k respectively for essentially the same service received? At a time when providers like BetaShares and Vanguard are offering ETF’s/Investment options with management fees of .07% and .14% – what are they getting for their money?
I don’t want this to be seen as an attack – because it’s not. I’d just like to gain some insight into the industry that will help to educate and guide me. Any personal/professional opinions on this would be greatly appreciated.
You are partly correct that a flat fee for service is fairer. But that may be dearer than a % approach for lower balances. Professional advisers have long since moved on from being just investment advisers. We are more strategic, trusted advisers who also know what products to use and the timing. When you get more experience, move to a more professional outfit, but you might need to take a pay cut too..
We only charge flat fees but the reality is that we do charge more for clients with a larger balance of funds to investment because there are more opportunities from an investment perspective (direct stocks, bonds etc). There is also a higher litigation risk the more money you manage.
ETFs/index funds offer no downside protection (which is when an adviser makes there money IMO). We got clients out of the US prior to the recent crash, are holding additional cash now to buy oversold investments and not to mention the value add of strategic advice. That betashares ETF doesnt tactically tilt in the same way or advise the clients on their superannuation contributions, re contribution strategies, reversionary pension or BDBN or whether a discretionary trust is appropriate etc.
There are some advisers that just tack on an ongoing % fee and barely speak to the client again. That’s not right and needs to be eradicated.
Get the best of both worlds Anon – use ETFs and charge a flat advice fee. Get the strategies and structures right, ensure all fees (product, platform & advice) do not exceed 1.5%, get asset allocation right and 99% of the job is done. Ideally being independent would help as well.
Realistically fees are heavily influenced by two factors (1) the amount of time required to document and complete the review / advice (2) the value as seen by the client. Realistically (1) is completely out of control at present and makes advice unaffordable for those up to about $150k in my opinion but there is nothing that can be done about that. (2) varies on the model being offered but often is about making sure the client doesn’t make a stupid decision and remains invested for the long term. In relation to the same service fee there is a higher cost for larger sums due to more work (generally) and higher risk but it would not be linear progression in my view.
Advisors on these industry magazines will say they are targeted unfairly..but 10k customers who were blatanly ripped off is a disgrace. According to Phillip, it was a revolving door, so there are plenty of planner who have ties to this issue. Phillip I am sure one of the sensible ones that moved on quickly, but sure plenty of young advisers didnt know any better.
Can’t imagine that ANZ will be the only big player to sign one of these EUs before the end of the royal commission…
Yes… but all planners now pay price
Yes very true and this is why we need industry associations that want to be professional associations to stand up for all planners, including our ANZ brothers and sisters, and distance themselves from ANZ by ending partnership programs.
The problem is the revolving door of bank planners. One of my friends, prior to becoming self employed, worked for ANZ. He was allocated a customer to service. The customer arrived at the branch, and he asked him, how may advisers from ANZ he had seen in the past. The response was “12”. My friend resigned the next day. The advice business is a people business. Unfortunately the institutional managers have yet to come to terms with it.
Phillip it doesn’t make an independent any better. It’s easy to bash the banks. I bet my left you know what that you and 99% of all Financial planners have many many clients who are a) not service properly and charged as if they were & b) not warranted to have fee for service regimes enforced on them (yes hoodwinked by the planner at the interview because that’s what you all do) because it is a fact that most clients do not need the fee for service regime but the planner needs it to survive.
Every single financial planner would fail an audit. YES, EVERY SINGLE PLANNER BAR NONE. Want to be brave and deny this industry secret? Well I dare any planner out there to open their doors fo an audit and scrutiny of their books. No one would pass. Not one planner in the country. Fee for service is a rort and everyone knows it.
The firm I work for owns their own licence. We pay an independent auditor every year to come and look at our files. Granted the auditor doesn’t review every file but he randomly chooses the files he does. We have had our issues and things to improve but we haven’t ever failed. We are not alone in this audit process.
I am guessing you had issues with your own financial planner and are proceeding to paint every other planner with the same brush. A tad unfair I think.
Steven makes some fair points. In most cases what does our annual review fee provide? Most retirees using industry funds as a pension vehicle seem quite satisfied to me without having annual reviews and paying an adviser for one. They’re sitting in a diversified investment option, get an annual statement and online access if they need it. I’m not saying the service fees we charge aren’t value for money – in a lot of cases they are and for many clients it’s a peace of mind thing. Yet, I suspect after this royal commission we may see adviser service fees capped if being paid from a super/pension fund. Furthermore, they may be banned from being deducted from super/pension funds. We will soon be heading for pure fee for service paid by invoice after a job is completed. Bankruptcy…coming to a financial planning firm near you.
Wait and see how satisfied the industry fund pensioners are when we hit the next GFC and they are drawing some 50-70% of their pension payments from growth assets at inopportune times which means they never re-gain lost ground afterwards. Hard to avoid that when most industry funds dont offer (or members dont use) segregated asset class investments.
Ive seen you constantly post on these threads, Steven. Im curious as to how you think the industry should operate? I personally agree many, not all, planners do charge ongoing fees that clients get little benefit from. I completely refute your statement every financial planner would fail an audit though.
Steven, stop the exaggerations. The problem certainly exists in some areas of the industry, the Licensee orphan books come to mind. But to generalise is wrong. Many of us service family groups across several generations – this kind of thing simply doesn’t fly. You don’t speak for all of us.
In 1986 Steven invested $2,000 in the AXA Australian Old Growth Fund and the adviser received a commission of 0.6% a year or $12 and in 2008 it was worth $1,998. Now Steven blames everyone… but himself. I’m close aren’t I.. I’ll now go back to hoodwinking the client at the interview that’s what we evil planners do.
Steven you don’t know what you are talking about