SYDNEY (Reuters) - Australia and New Zealand Banking Group Ltd (ANZ.AX) said it would stop paying financial planners bonuses for selling its products, the first of the country’s top lenders to change business practices amid a powerful inquiry into misconduct in the sector.
The move by Australia’s No. 3 lender on Monday shows how the Royal Commission into the finance industry is having immediate and far-reaching effects, and puts pressure on other major banks to follow in its footsteps.
Three months into the year-long inquiry, the industry has been embarrassed by allegations of planners taking bonuses and commissions for selling inappropriate and poorly performing products - or in some cases - for no products at all.
Senior ANZ representatives have testified that 5 percent of financial planning product sales were inappropriate, with one employee testifying that the bank pushed for a sales agreement with a financial planner who had 700 clients despite knowing he had failed regulatory checks.
“We know it has taken too long for changes to occur, so where we see solutions we will act,” Chief Executive Shayne Elliott said in a statement, which did not mention the Royal Commission.
“That is why we are getting on with these initiatives now,” Elliott added.
ANZ, which will have about 300 financial planners after selling most of its advice businesses to IOOF later this year, added it would fire planners who provided inappropriate advice and finish compensating about 9,000 customers who had received bad advice by end-2018.
The overhaul marks a reversal for ANZ which, along with the rest of the industry and the conservative federal government, argued until late 2017 that a Royal