ob体育 has accepted court enforceable undertakings from the Commonwealth Bank of Australia and Australia and New Zealand Banking Group under which the banks have agreed to change the way they distribute superannuation products to their customers.
ob体育 investigated CBA's distribution of its Essential Super product and ANZ鈥檚 distribution of its Smart Choice Super and Pension product (Smart Choice Super) through bank branches. ob体育 found a common practice of offering those products to customers at the conclusion of a fact-finding process about customers鈥� overall banking arrangements.
CBA's fact-finding process was called a 'Financial Health Check'. CBA staff also sometimes helped customers roll over their other superannuation into the Essential Super account at the time of distribution.
ANZ鈥檚 fact-finding process was called an 'A-Z Review'.
ob体育 was concerned that the proximity between the fact-finding process and the discussion about Essential Super or Smart Choice Super was leading CBA staff and ANZ staff to provide personal advice to customers about their superannuation. 聽Branch staff for both CBA and ANZ were only authorised to provide general advice.
Stricter consumer protection laws apply to financial services licensees when their representatives give personal advice about complex financial products such as superannuation than when they provide general advice about those products. This includes the requirement, with personal advice, to give a customer a Statement of Advice and to act in the customer鈥檚 best interests. People who give personal advice about complex products are also required to meet higher training standards.
ob体育 was concerned that customers may have thought, due to the proximity of the fact-finding process to the offer of Essential Super or Smart Choice Super, that the CBA branch staff or the ANZ branch staff were considering risks specific to the customer when this was not the case.
These court enforceable undertakings prevent CBA from distributing Essential Super in conjunction with a Financial Health Check and ANZ from distributing Smart Choice Super in conjunction with an A-Z Review. They also require CBA and ANZ to each make a $1.25 million community benefit payment. If there is a breach of the undertaking ob体育 can, under the ob体育 Act, apply for orders from the court to enforce compliance.
CBA chose to suspend the distribution of Essential Super in CBA branches in October 2017.
聽'ob体育 will continue to proactively monitor how complex financial products such as superannuation are sold,' ob体育 Deputy Chair Peter Kell said.
ob体育's actions underline the importance for financial services licensees to ensure that customers understand the nature of advice they are receiving about their superannuation.
View the enforceable undertaking
Background
ob体育's investigation arose following a surveillance conducted in relation to CBA鈥檚 distribution of its retail superannuation product, Essential Super and ANZ鈥檚 distribution of its retail superannuation product, Smart Choice Super.
These actions are part of ob体育鈥檚 Wealth Management Project. The Wealth Management Project was established in October 2014 to lift the standards of major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP).