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Improving Customer Outcomes

During the year, we have participated in a large number of reforms, at an industry and bank level, to improve customer outcomes and restore community trust. Discussed below are the key reforms on which we have been working.

Changes to remuneration

We are implementing all recommendations from Stephen Sedgwick’s ‘Retail Banking Remuneration Review’, which is focused on strengthening the alignment of retail bank incentives, practices and good customer outcomes.

We have made significant progress, with actions completed since commencement of the program including: changing frontline staff incentive and recognition plans so that no rewards are directly linked to sales; removing the payment of volume-based incentives to aggregators, brokers and introducers; changing staff performance management plans; and focusing our efforts on initiatives that will support the achievement of sustainable culture change.

We are on track to complete all recommendations ahead of expected timeframes and will make further changes as quickly as possible to ensure we achieve full alignment. Management provides regular updates to the Board Human Resources Committee on progress. We will continue to report externally through the Australian Banking Association’s (ABA) reporting framework.

New Banking Code of Practice

We are implementing strengthened protections for consumer and small business customers arising from the new Banking Code of Practice (Code). The Code has been revised to better reflect community standards and will be binding and enforceable. Changes include:

  • loan contracts for small businesses that are written in plain English and easier to understand – we have simplified our main contract for small business customers, halving contract length and increasing customer safeguards;
  • active promotion of affordable banking products, specifically assisting people on low incomes to pick appropriate products – see our discussion below on product suitability;
  • assistance for vulnerable customers – we have developed
  • a new Vulnerable Customer mandatory learning module to help our staff identify and assist customers experiencing vulnerable circumstances;
  • abolition of fees and commissions on lenders mortgage insurance; and
  • an end to unsolicited offers of credit card increases.

Better products and services

At the end of 2016, we appointed former Commonwealth Ombudsman Colin Neave as our first Customer Fairness Advisor – signalling the start of a number of changes we knew we needed to make.

Customer remediation principles developed by Mr Neave, the key elements of which are below, have guided our work this year to fix systemic errors, refund impacted customers more quickly and learn from our mistakes so as not to repeat them in future.

Customer remediation principles

  • customer focused – fair, honest and efficient;
  • comprehensive, timely and transparent decision-making;
  • appropriate governance and oversight;
  • clear communication to customers impacted by a remediation issue; and
  • where relevant, a commitment to paying refunds or compensation to customers without undue delay.

We have established a Responsible Banking group within our Australian Retail and Commercial Business, with specialist teams dedicated to customer remediation, as well as product suitability and responsible lending.

Our Product Suitability Program aims to achieve fair customer outcomes via proactive customer contact, triggered by behavioural indicators in our data. It is intended to help our customers derive greater value from our products.

We have focused initially on vulnerable customers, particularly those with persistent credit card debt or with potential for future financial stress. During the year, our bankers provided financial education and coaching to around 2,000 customers with persistent credit card debt on how to use, and pay down, their credit card. In addition, those customers were offered a lower interest rate for 12 months, or a product transfer (e.g. from a ‘rewards’ card to a low-rate card). The results of the pilot were encouraging, with customers initially increasing their monthly payments and using their credit cards less, with lower arrears levels.

We are also building product suitability into our product review processes – for example, we are proactively contacting our home loan customers paying interest only before they move to principal and interest payments, to enable them to plan for, and successfully manage, the transition to higher payments.

Finally, at a product level, this year we have removed ATM fees for non-ANZ customers and reduced rates on low-rate cards by two percentage points.

The agile transformation of our workforce – our New Ways of Working – means we are in a better position to implement changes in a timely manner with minimum disruption to our customers. There is more to do but our changes so far are already making ANZ easier to manage and better for customers.

We recognise that getting the basics of customer service right is essential to underpinning our social licence as a bank.

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