ANZ boss says Royal Commission bank was too focused on revenues – live | Australia news

It takes more than four years for ANZ to identify an incident that is later considered a significant violation.

Orr brings Elliott to an ASIC report on the reporting practices of major Australian banks.

He concluded that Australian financial licensees took an average of 1,517 days to identify an incident that was later identified as a major offense.

Orr: "And that number of days, 1,517 days, was also the average time ANZ needed to do it. Is it correct?"

Elliott: "I think so.

Orr: "So On average, it took ANZ more than four years to identify an incident that was subsequently considered a significant violation?

Elliott: "Yes.

Orr: "May I ask you what are your observations on this discovery, more than four years to identify an incident?

Elliott: "Well, I mean, it's clearly unacceptable and it's not okay."

Shayne Elliott offers a mea culpa:

Obviously, the issues we were talking about lasted for some time, especially the [last] Period of 10 years, but I think that, for reasons of equity, we go back further with regard to the causes.

[Celareflètel'argumentde[Thatmirrorstheargumentfrom[Celareflètel'argumentde[ThatmirrorstheargumentfromAndrew Thorburn, Managing Director of NAB, who recognized that the industry had started moving away from its customers 20 years ago].

It has been recognized that sometimes – we must always strike the right balance between the needs of the different actors – we have become too income-oriented, in particular, we do not use the word sales, but of course income, as a definition of good behavior, or good results of excellence, if you will.

People who generated good income were perceived as doing a good job, and we paid less attention to how they achieved these results..

ANZ has already acknowledged to the Royal Commission that it has been engaged in a series of faults and behaviors below the standards and expectations of the community.

In the submissions to the commission, the bank blamed a culture that has become too focused on income and sales.

Elliott is CEO and Executive Director of ANZ since January 1, 2016.

Since last year, he is also president of the Australian Banking Association.

He joined ANZ in June 2009 and has held various positions within the bank, including as Global Managing Director of its corporate business unit and as CFO.

Before joining ANZ, he held management positions in two other financial institutions –Citigroup and a major investment bank in the Middle East.

Shayne Elliott, the general manager of ANZ, is now in the witness stand.

Senior Counsel Assistant Royal Commission Rowena Orr The QC directs the questions.

Wilkins is very defensive of the vertically integrated MPA model.

Commissioner, Kenneth Hayne, do not buy it.

Hodge wants to know if an AMP client can be badured that he will receive good advice from an AMP – aligned financial advisor, and if he will receive compensation if the advice is given. turn terrible.

He notes that yesterday, AMP agreed that it had set aside $ 460 million pay customers who are victims of the MPA billing without service scandal.

Wilkins tries to rebadure customers that they can still trust AMP.

In any case, this marks the end of Wilkins' testimony.

Shayne Elliott, the general manager of ANZ, is the following.

In recent years, banks have repeatedly stated that their financial advisers act in the best interests of their clients by selling them products from the same banks for which they worked.

And why would an AMP-aligned financial advisor not advise a customer to buy AMP products? AMP products are superior to the products of its competitors!

Well, the financial advisory business has been so profitable for all concerned – the banks, the advisers – that the number of advisers has exploded.

The Royal Commission heard in April that since the global financial crisis, the number of councilors has risen from around 18,000 end 2009 to now 25,386, an increase of 41%.

Only 8,704 of all financial advisors – or 35% – have an undergraduate degree or higher.

Hodge exposes the MPAs vertically integrated model.

He explained that AMP's customers are routed through various distribution channels, with the main distribution channel being "advice" through direct or aligned financial advisors.

AMP has data on the percentage of its customers who choose their own products.

The percentage is high for customers who use platforms and then decrease through funds, risks and banks.

Hodge has a document showing that there is a Share of the $ 370 million margin. He wants to know what that means.

Wilkins: "This is a payment that goes from the manufacturing units to the consulting unit, recognizing access to all these forms of advice in terms of the flow of products that can be routed to AMP."

Hodge: "Tell me if I'm right about it. Is this the case $ 330 million commissions are paid by the products on the board? "

Wilkins: "Yes.

Hodge: "And $ 370 million represents the amount of margin left by these AMP products to customers that is then shared with advisors?"

Wilkins: "Yes."

A huge flow of funds comes from clients sent by AMP-aligned advisors. The funds are sent to AMP Capital and the majority of these funds are distributed to other fund managers and AMP products.

Howard-McDonald warned in his memorandum:

As a company, we often talk about the value of a vertically integrated company But in practice, I feel that our organization has not quite understood what it means in terms of expectations from customers and other stakeholders.

In addition, we work daily in four distinct lines of business, who share the same name and spend a lot of time doing business with them. sometimes at the expense of customer results.

Hodge asks Mike Wilkins he shares the view that understanding MPA vertical integration is problematic.

Wilkins: "No, I do not do it."

Hodge then asks, "I think it's fair to say that you have not abandoned the vertical integration?"

Wilkins: "No"

Hodge: "And for AMP, at least as it stands, vertical integration is quite fundamental for the company?"

Wilkins: "We believe in vertical integration. We believe that this structure is also beneficial for the consumer."

The lead counsel badisting the royal commission Michael Hodge QC request Mike Wilkins about a document that Wilkins received from AMP's Client Advocate, Melanie Howard-McDonald.

Howard-McDonald's role was to deal with customer complaints on a daily basis.

She wrote the document at the request of Wilkins. He wanted his opinion on a prudential investigation with the Commonwealth Bank. He had asked the top 100 AMP leaders to do the same thing, but not everyone responded to his request.

Howard-McDonald's views were shared with AMP's board of directors, who used them to develop AMP's response to the CBA's investigation.

She saw serious problems with MPAs vertically integrated model.

Wilkins says that he did not agree with his views on vertical integration.

Recall:

The "vertical integration"The economic model has been seriously criticized by the royal commission this year.

Banks have discovered long ago that it was very profitable to sell their clients advice and financial products. If they could charge their customers for financial advice, and if these "tips" were to buy their financial products, they would benefit from a profitable feedback loop. The business model has been called vertical integration.

This year, the business regulator released a report on the practice entitled "Vertically Integrated Institutions and Conflicts of Interest".

He reviewed the quality of financial advice offered by the two largest financial advisory license holders owned or controlled by Commonwealth Bank, ANZ Banking Group, Westpac, National Australia Bank and AMP.

She found that their financial advisers had not respected the interests of clients in 75% of the board files reviewed.

He concluded that the banks were providing personal financial advice to retail clients while selling them financial products, resulting in an "inherent" conflict of interest.

Hello everyone.

Thank you for joining Guardian Australia's blog on the Royal Bank Commission.

We are back today with Mike Wilkins, Acting Director General of AMP. Once Wilkins finishes, we'll hear from the ANZ CEO, Shayne Elliott.

AMP had another terrible day on the witness stand yesterday, but the course of its action was hardly affected. I guess everything is relative. AMP shareholders are used to the worst news.