ANZ executives failed to act on reports of significant misconduct

24 April 2018

ANZ executives failed to act on reports of significant misconduct

ANZ’s head of wealth solutions and partnerships Kieran Forde appeared before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on Monday afternoon to answer questions about five financial advisors who are accused of fraud, misappropriation, and misleading or deceiving customers.

An ANZ financial advisor known as “Mr A” advised his clients to invest in property. Mr Forde said Mr A should not have given this advice, but Mr A convinced five of his clients to invest through their self-managed superannuation funds.

The property, a marina, would be bought for $1.6 million, and Mr A said it could be put on the market for $2.05–$2.09 million. Four of the clients invested $100,000, and the fifth client invested $200,000.

Then, the clients allege, they heard very little from Mr A about the property.

Mr A told his clients that he had put their money into a unit trust, which would be used to purchase the property. In fact, he had instead put the money into a company of which he was a director.

A November 2011 audit returned concerning findings about Mr A’s advice, but Mr Forde testified that he was not aware of any disciplinary measures being taken, and did not know why they hadn’t been.

Further allegations against Mr A from September 2013 — almost two years after the audit — involve four clients who were advised to invest in an apartment. After using his own company to purchase the apartment with their money, he later told his clients that the money was gone. Despite promising a quick return, the apartment sat unsold for two years.

When a client complained to Millennium3, the subsidiary of ANZ that employed Mr A, it told them that it was “unclear whether a loss has been suffered to you at all in respect to [Mr A’s] conduct.”

Senior counsel Rowena Orr QC asked Mr Forde why it was “unclear”, to which Mr Forde said he didn’t know. Ms Orr then reminded Mr Forde that he was put forward by ANZ to answer questions about these events. Witnesses having limited knowledge of the areas about which they are being questioned has been an ongoing source of frustration for the Royal Commission.

It then emerged that ANZ had identified four other self-managed superannuation funds that were listed as unit holders in the unit trust, but that no attempts had been made to contact these clients or investigate any potential losses. Mr Forde said again that he did not know why enquiries were not made.

Mr Forde conceded that “there was enough information in the initial complaint in 2013 to warrant … talking to those other customers at that time.” After further questioning he admitted that ANZ did not investigated because “the commercial interests of Millennium3 took precedent” over the interests of the clients.

At least eight clients have been affected, but ANZ is looking into 103 further cases. ANZ has referred Mr A’s unauthorised withdrawal of $224,000 from customer accounts between March 2011 and February 2012.