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| Banking royal commission: Tony Abbott calls for regulators to be sacked – live | Banking royal commission: Tony Abbott calls for regulators to be sacked – live |
| (35 minutes later) | |
| It has emerged that the number of “inappropriate” advice instances recorded by ANZ has increased rather dramatically in recent years. | |
| In 2008 it was 60. | |
| By 2013 it had risen to 191. | |
| Then, in 2014, it jumped to 1,401 instances before doubling a year later in 2015 when 2,810 instances were recorded. | |
| Orr has been asking how exactly that could be? | |
| Rixon responds that the bank’s recording process has changed, but that they’re also “detecting many more instances now because our control environment has improved”. | |
| While Rixon continues giving her evidence, the ANZ has told the Australian Stock Exchange that the royal commission is going to cost it $50m in 2018. | |
| With its chief risk officer Kylie Rixon on the stand, ANZ tells the ASX that the Royal Commission is expected to cost it $50m for the year to 30 Sept 2018, $16m in first half of 2018 #BankingRC @abcnews #auspol #ausbiz | |
| “Legal and other costs relating to the royal commission ... are currently expected to be in the range of $50 million for the year ending 30 September 2018 and were $16 million” in the first half of the year. | |
| “ANZ is committed to engaging with the inquiry in an open, constructive and transparent manner. ANZ is unable to predict the outcome of the inquiry or its impact on the bank or broader industry,” the statement read. | |
| Back to those incentives for financial planners. Rixon has admitted under questioning from Orr that while revenue generation may have been removed as a factor in bonuses for ANZ’s salaried financial planners, it may not be the case for its allied planning firms. | |
| Orr asks Rixon whether those four allied dealer groups bonuses “are calculated by their generation of revenue”. | |
| “Yes, they may well be,” Rixon responds. | |
| She’s admitted there are “difficulties” managing those allied planners, and under questioning from Orr concedes that “on reflection, ANZ could have started the program to encourage” associated dealers to move away from revenue incentives “earlier than it did”. | |
| Note the word encourage, not force. | |
| Rixon has also revealed that in the last 12 months the bank has “performance managed” 71 of its in house advisers who “have not met ANZ standards”. “Over half” have left the bank, either through resignation or termination. | |
| Orr is asking what sort of conduct led to those advisers being performance managed. | |
| “Some of those people are planners who may have been ... a new adviser with new accreditation [who] on vetting doesn’t show an ability to meet the standards required,” Rixon explains. | |
| “ ... It could be behaviours, it could be the way they’re applying certain processes that [shows] there is an issue.” | |
| A little earlier, explaining a decrease in the number of advisers employed in house by ANZ in the last decade – 514 in 2008 down to 277 this year – that it is “becoming harder and harder to recruit the right people who we think have the right standards and qualifications”. | |
| Before Tony Abbott’s spray at the regulators of banks, the chair of the Australian Competition and Consumer Commission Rod Sims was blaming lack of significant penalties and legal delays for bank misbehaviour. | Before Tony Abbott’s spray at the regulators of banks, the chair of the Australian Competition and Consumer Commission Rod Sims was blaming lack of significant penalties and legal delays for bank misbehaviour. |
| On Radio National, Sims welcomed the government’s announcement it will increase penalties in the financial sector, arguing that company boards needed to know there would be “really dire consequences” if they breach the law, rather than treating it as a cost of doing business. | On Radio National, Sims welcomed the government’s announcement it will increase penalties in the financial sector, arguing that company boards needed to know there would be “really dire consequences” if they breach the law, rather than treating it as a cost of doing business. |
| “What I have found very sad about watching the royal commission is you’re getting bankers both past and present who say ‘we’d like to do the right thing but if we did the right thing it’d damage our share price and our profits’. Ok let’s change the equation. If you’ve got to factor penalties of hundreds of millions of dollars in, it actually does matter to your bottom line if you breach the act,” he said. | “What I have found very sad about watching the royal commission is you’re getting bankers both past and present who say ‘we’d like to do the right thing but if we did the right thing it’d damage our share price and our profits’. Ok let’s change the equation. If you’ve got to factor penalties of hundreds of millions of dollars in, it actually does matter to your bottom line if you breach the act,” he said. |
| Sims said penalties were increased for competition law breaches in 2007 but the ACCC had “had difficulty convincing the legal fraternity that parliament has actually changed the rules”. He suggested courts were following old precedents and continuing to give penalties in the tens of millions. | Sims said penalties were increased for competition law breaches in 2007 but the ACCC had “had difficulty convincing the legal fraternity that parliament has actually changed the rules”. He suggested courts were following old precedents and continuing to give penalties in the tens of millions. |
| Sims noted that the ACCC is responsible for competition and a “fair bit” of the unconscionable conduct uncovered by the royal commission comes under the domain of the Australian Securities and Investment Commission. | Sims noted that the ACCC is responsible for competition and a “fair bit” of the unconscionable conduct uncovered by the royal commission comes under the domain of the Australian Securities and Investment Commission. |
| He said he “wont’ comment” on Asic’s performance but agrees with Nationals senator John Williams that “you have to be feared”. | He said he “wont’ comment” on Asic’s performance but agrees with Nationals senator John Williams that “you have to be feared”. |
| Orr is drilling into the way incentives at ANZ financial planning affected the working culture. | Orr is drilling into the way incentives at ANZ financial planning affected the working culture. |
| She’s asking about advisor “leaderboards”. We’re told the leaderboards no longer exist, but that previously they ranked financial advisors based on – Rixon says – “certain criteria”. | She’s asking about advisor “leaderboards”. We’re told the leaderboards no longer exist, but that previously they ranked financial advisors based on – Rixon says – “certain criteria”. |
| Orr suggests it would be correct to assume revenue would have been part of the makeup of those leaderboards. Rixon admits that’s correct. | Orr suggests it would be correct to assume revenue would have been part of the makeup of those leaderboards. Rixon admits that’s correct. |
| “What does that say about the culture within the ANZ financial planning [division]?” Orr asks. | “What does that say about the culture within the ANZ financial planning [division]?” Orr asks. |
| Rixon responds that revenue is “just one of the factors” that made up the leaderboard rankings. 15% of the rankings, as it were. | Rixon responds that revenue is “just one of the factors” that made up the leaderboard rankings. 15% of the rankings, as it were. |
| From the wires: a law firm is investigating a possible class action against financial services giant AMP, which has admitted to lying to customers, AAP reports.Quinn Emanuel Urquhart & Sullivan is looking to hear from shareholders who’ve seen the company’s stock plummet.AMP shares lost more than $1bn in market value last week after the damning evidence presented to the financial services royal commission. | From the wires: a law firm is investigating a possible class action against financial services giant AMP, which has admitted to lying to customers, AAP reports.Quinn Emanuel Urquhart & Sullivan is looking to hear from shareholders who’ve seen the company’s stock plummet.AMP shares lost more than $1bn in market value last week after the damning evidence presented to the financial services royal commission. |
| Kylie Rixon, the chief risk officer for “digital and wealth” at ANZ, is up first this morning – basically she’s in charge of managing risk for the bank’s financial services arm. | Kylie Rixon, the chief risk officer for “digital and wealth” at ANZ, is up first this morning – basically she’s in charge of managing risk for the bank’s financial services arm. |
| We’re hearing about the relationship between the bank’s financial services arm and the four associated entities through which it also offers financial services. Rowena Orr, the senior counsel assisting the commission, is asking about the financial adviser incentives that were in place prior to the 2013 FOFA reforms. | We’re hearing about the relationship between the bank’s financial services arm and the four associated entities through which it also offers financial services. Rowena Orr, the senior counsel assisting the commission, is asking about the financial adviser incentives that were in place prior to the 2013 FOFA reforms. |
| In her witness statement, Rixon said the previous arrangements, which included incentives for bringing in new revenue, created a “culture of emphasising business more than the best interest of the client”. | In her witness statement, Rixon said the previous arrangements, which included incentives for bringing in new revenue, created a “culture of emphasising business more than the best interest of the client”. |
| Orr is asking about the current incentive scorecard for managers, which Rixon admits still contain a 15% “scorecard” incentive for managers who bring in new revenue. | Orr is asking about the current incentive scorecard for managers, which Rixon admits still contain a 15% “scorecard” incentive for managers who bring in new revenue. |
| The former prime minister Tony Abbott has found a new point of difference in the bank royal commission fallout, with a fiery call to sack all existing regulators this morning. | The former prime minister Tony Abbott has found a new point of difference in the bank royal commission fallout, with a fiery call to sack all existing regulators this morning. |
| Abbott told 2GB Radio: | Abbott told 2GB Radio: |
| “The thing that worries me, Ray, is what were the regulators doing? I mean we all know there are greedy people everywhere, including in banks ... but banking is probably the most regulated sector of our economy - what were the regulators doing to allow all of this to be happening? ... | “The thing that worries me, Ray, is what were the regulators doing? I mean we all know there are greedy people everywhere, including in banks ... but banking is probably the most regulated sector of our economy - what were the regulators doing to allow all of this to be happening? ... |
| “My fear is that at the end of this royal commission we will have yet another level of regulation imposed on the banks when, frankly, what should happen is, I suspect, all the existing regulators should be sacked and people who are much more vigilant and much less complacent [should] go in their place. | “My fear is that at the end of this royal commission we will have yet another level of regulation imposed on the banks when, frankly, what should happen is, I suspect, all the existing regulators should be sacked and people who are much more vigilant and much less complacent [should] go in their place. |
| “The analogy is – yes punish the criminals but if the police are turning a blind eye to the criminals, well, you’ve got to get rid of the police and get decent people in there.” | “The analogy is – yes punish the criminals but if the police are turning a blind eye to the criminals, well, you’ve got to get rid of the police and get decent people in there.” |
| The behaviour by the financial services industry uncovered so far has been shocking. Last week AMP admitted to lying to regulators, and the Commonwealth Bank admitted some of its financial planners have been charging fees to clients who have died. | The behaviour by the financial services industry uncovered so far has been shocking. Last week AMP admitted to lying to regulators, and the Commonwealth Bank admitted some of its financial planners have been charging fees to clients who have died. |
| While we’re waiting for kick-off from the hearing today, our economics correspondent Gareth Hutchens has written this handy primer on everything you need to know about what the commission is looking at and what we’ve learned so far. You can also read a bit more about the human faces at the heart of the stories of malpractice. | While we’re waiting for kick-off from the hearing today, our economics correspondent Gareth Hutchens has written this handy primer on everything you need to know about what the commission is looking at and what we’ve learned so far. You can also read a bit more about the human faces at the heart of the stories of malpractice. |
| Good morning. | Good morning. |
| Welcome to our live coverage of today’s hearing from the royal commission into the banking, superannuation and financial services industry. Today the commission turns its attention to ANZ and returns to AMP after last week’s explosive advice that resulted in the resignation of its CEO. Later it will hear about NAB’s financial advisers. | Welcome to our live coverage of today’s hearing from the royal commission into the banking, superannuation and financial services industry. Today the commission turns its attention to ANZ and returns to AMP after last week’s explosive advice that resulted in the resignation of its CEO. Later it will hear about NAB’s financial advisers. |
| This morning Malcolm Turnbull admitted the Coalition made a “political mistake” by refusing to set up a royal commission into banks for so long but defended the decision, arguing it helped put “customers first”. Paul Karp has that story here. | This morning Malcolm Turnbull admitted the Coalition made a “political mistake” by refusing to set up a royal commission into banks for so long but defended the decision, arguing it helped put “customers first”. Paul Karp has that story here. |
| Overnight Labor called on Turnbull to set up a compensation scheme for victims. | Overnight Labor called on Turnbull to set up a compensation scheme for victims. |
| Yesterday the financial services minister, Kelly O’Dwyer, had a tense exchange with Insiders host Barry Cassidy over whether the Coalition had excessively delayed the inquiry. She maintained it had taken a deliberate approach, despite agreeing that the royal commission would be good for consumers. This morning the Nationals senator John Williams – who for a long time was the only person in the Coalition party room calling for a royal commission – told ABC radio that he was “quite amazed” at the unwillingness to apologise. | Yesterday the financial services minister, Kelly O’Dwyer, had a tense exchange with Insiders host Barry Cassidy over whether the Coalition had excessively delayed the inquiry. She maintained it had taken a deliberate approach, despite agreeing that the royal commission would be good for consumers. This morning the Nationals senator John Williams – who for a long time was the only person in the Coalition party room calling for a royal commission – told ABC radio that he was “quite amazed” at the unwillingness to apologise. |