In the wake of the royal commission, APRA had asked a number of the major banks, superannuation funds and insurance companies to each complete a self-assessment, looking at their own behaviour and operations.
All of the big four except ANZ have published their evaluations, with Westpac being the last to do so in July.
ANZ however has insisted that it is up to the regulator when its assessment goes public. According to Mr Gonski, APRA requested the banks’ self-assessments on a confidential basis and the bank has “respected that.”
APRA has since required several institutions to carry an additional capital overlay as a contingency against the issues raised, with poor culture costing the ANZ, NAB and Westpac $500 million each.
But ANZ intends to have its capital overlay removed, by successfully implementing a plan to address its cultural issues.
Culture of complacency
Speaking on the self-assessment, Mr Gonski said ANZ has a culture of complacence.
He said the bank identified “a conditioned acceptance at ANZ that it’s ‘all too hard’ or ‘it’s the way it’s always been.’”
“We have a culture where our teams do not always speak up,” he noted.
“When permission of a process is ambiguous we can be conservative in our decision making. Often this leads to an outcome where we do nothing. This needs to change.”
From a cultural perspective, multiple areas had contributed to the bank failing its customers.
“Accountability for outcomes across ANZ, particularly in relation to inaction or poor performance, often lacked clarity below the senior executive level (which has been enhanced by the recent introduction of the Banking Executive Accountability Regime),” Mr Gonski said.
“In relation to governance, we found fragmented infrastructures, drawn-out processes and siloed teams. We also found aspects of non-financial risk management lacking maturity and our complexity [impeding] swift action as well as increasing the reliance on informal networks.”
He added there was a compliant culture with “strong loyalty to teams – often at the expense of the broader group,” a lack of clarity and structure around the meaning of “customer centric,” and a greater focus on short-term fixes.
Transformation roadmap
The bank in its plan to address its issues, developed a “roadmap” with a number of focus areas identified through the self-assessment as well as the royal commission.
The areas are: simplification, culture, governance and accountability, remediation and management of operational risk.
ANZ said it is planning to establish a Royal Commission & Self-Assessment Oversight Group to oversee its updates.
The bank is expanding its specialist customer remediation team to improve the time it takes it to investigate issues as well as when customers receive payments. The number of specialists, currently at 500, is expected to rise.
Having already cut back on a number of its businesses, ANZ is planning to simplify further: having fewer products and more effective systems and processes.
Earlier this month, ANZ also reformed its remuneration structure, which will result in individual bonuses for the vast majority of employees being scrapped for an incentive based on the whole group’s performance.
Keeping leaders accountable
On the ANZ board, the bank has named three issues: “short-termism,” complexity and complacency.
Mr Gonski said the board will be improving the way it questions management and itself in relation to the group’s long-term ambitions.
“It is proposed management will report quarterly to the board on progress in relation to the actions in the roadmap,” he said.
“In addition, as a board we commit to having a detailed review of the board’s charter and the charters of its principal board committees to ensure they provide clarity to the board, management, and external stakeholders around the involvement of directors in the specific matters raised in the self-assessment and the roadmap.”
The review is expected to be completed by the end of the year, with Mr Gonski to provide an update at the bank’s annual meeting.
He concluded his statement with a number of goals, namely that ANZ will be “a simpler and less complex bank,” with staff that know what is expected of them and leaders that are held to account.
“We know there is a significant amount of work ahead and the ultimate measure of success will be the removal by APRA of the additional capital overlay,” Mr Gonski said.
