Case studies - Corporate Responsibility

Case studies

Financial advice to vulnerable customers
In 2008 complaints regarding advice received from Financial Planners increased. Most were related to market volatility and disappointment with investment returns, not unexpected given that even investors in conservative portfolios have suffered poor returns. Three files reviewed by the Customer Advocate and a further three files which were being handled by FOS dealt with claims by or on behalf of an inexperienced, older investor, all single women. The complaints variously claimed the customer was not able to adequately assess the advice because of age, lack of financial experience and illness. They further claimed the client should been advised to take away the Statement of Advice (SOA) provided by the adviser for further consideration before accepting and acting on the advice on the same day. Further, it was claimed the adviser should have recommended the client have a family member or other person be present when the advice was being delivered. The Customer Advocate's investigations included a review of the files and discussion with relevant personnel. The investigation did not support the claim of inappropriate advice and found client interviews were well documented and appropriate disclosures were made. However the Customer Advocate raised questions with the business about best practice in relation to clients who may be assessed as less experienced or more vulnerable. The Customer Advocate recommended advisers refer these customers more explicitly to the availability and importance of the cooling off period; that the adviser remind the client of the opportunity to take the SOA away for further consideration before making a final decision; and that the adviser make a point of discussing with these clients the option of having a support person present at the time of advice. These recommendations have been accepted by the business and have been incorporated into staff training and guidelines.

Financial advice to vulnerable customers

In 2008 complaints regarding advice received from Financial Planners increased. Most were related to market volatility and disappointment with investment returns, not unexpected given that even investors in conservative portfolios have suffered poor returns. Three files reviewed by the Customer Advocate and a further three files which were being handled by FOS dealt with claims by or on behalf of an inexperienced, older investor, all single women.

The complaints variously claimed the customer was not able to adequately assess the advice because of age, lack of financial experience and illness. They further claimed the client should been advised to take away the Statement of Advice (SOA) provided by the adviser for further consideration before accepting and acting on the advice on the same day. Further, it was claimed the adviser should have recommended the client have a family member or other person be present when the advice was being delivered.

The Customer Advocate's investigations included a review of the files and discussion with relevant personnel. The investigation did not support the claim of inappropriate advice and found client interviews were well documented and appropriate disclosures were made.

However the Customer Advocate raised questions with the business about best practice in relation to clients who may be assessed as less experienced or more vulnerable. The Customer Advocate recommended advisers refer these customers more explicitly to the availability and importance of the cooling off period; that the adviser remind the client of the opportunity to take the SOA away for further consideration before making a final decision; and that the adviser make a point of discussing with these clients the option of having a support person present at the time of advice. These recommendations have been accepted by the business and have been incorporated into staff training and guidelines.

Complaint identifies need to improve disclosure
This case indicates how complaints can lead to improvements to the product which, although minor, may avoid future complaints and dissatisfaction. The customer raised concerns regarding an offer made to her in November 2007 to upgrade her ANZ Frequent Flyer Visa (AFFV) credit card to an ANZ Frequent Flyer Visa Platinum (AFFVP) card. The customer claimed that the offer letter did not make it clear that the reward points on her new card would accrue at the same rate applicable to her AFFV. Prior to review by the Customer Advocate, the customer had been told on a number of occasions over six months that her complaint was not valid. The Customer Advocate agreed with the customer that the offer letter did not make it clear that reward points on the AFFVP would accrue at the rate applicable to the AFFV and concluded that the ANZ Rewards Terms and Conditions also did not make this matter clear. This matter was brought to the attention of the ANZ Product Manager, who confirmed that other customers had raised this concern and that the offer letter had since been revised. To resolve this matter, the customer was offered an apology and fee waivers. The Customer Advocate recommended that the ANZ Rewards Terms and Conditions be amended to make them clearer to customers. The recommendation was accepted.

Complaint identifies need to improve disclosure

This case indicates how complaints can lead to improvements to the product which, although minor, may avoid future complaints and dissatisfaction.

The customer raised concerns regarding an offer made to her in November 2007 to upgrade her ANZ Frequent Flyer Visa (AFFV) credit card to an ANZ Frequent Flyer Visa Platinum (AFFVP) card. The customer claimed that the offer letter did not make it clear that the reward points on her new card would accrue at the same rate applicable to her AFFV.

Prior to review by the Customer Advocate, the customer had been told on a number of occasions over six months that her complaint was not valid. The Customer Advocate agreed with the customer that the offer letter did not make it clear that reward points on the AFFVP would accrue at the rate applicable to the AFFV and concluded that the ANZ Rewards Terms and Conditions also did not make this matter clear.

This matter was brought to the attention of the ANZ Product Manager, who confirmed that other customers had raised this concern and that the offer letter had since been revised. To resolve this matter, the customer was offered an apology and fee waivers. The Customer Advocate recommended that the ANZ Rewards Terms and Conditions be amended to make them clearer to customers. The recommendation was accepted.

Risks of assuming customer error
Complaints which involve marital disputes require sensitive and careful handling. The initial investigation of this case did not look closely at the bank's process before recording a default but assumed error by the customer. The husband and wife had a repayment holiday on their Home Loan due to financial difficulties. Repayments were to recommence on a set date and to come from a joint account. Before that date the marriage broke down and the wife left the family home. The husband took responsibility for house payments. He transferred funds from his sole account to the joint account on the set date for the purpose of repayments to the Home Loan. ANZ attempted to debit the Home Loan repayment from the joint account on that date but as the sweep for funds is conducted in the early hours of the day the transaction was not processed and the funds remained in the account. The next week the wife withdrew the funds from the joint account and the Home Loan fell into default. The husband who was unemployed with responsibility for the children was disadvantaged by the loss of funds. ANZ, while willing to consider hardship arrangements for the husband, refused to reimburse him on the basis that he should have credited the funds the day before the loan repayment was due. The assumption was made that the bank's processes had been properly implemented. The wife was requested to repay the funds without success. As it was a joint account she had a right to access the funds. After the matter was referred to Customer Advocate it was discovered that ANZ's system should have tried to take the repayment from the joint account on two consecutive days before recording a payment default but failed to do so. This failure occurred because of human error. The customer was refunded the amount of the repayment and accepted this as a resolution of the matter.

Risks of assuming customer error

Complaints which involve marital disputes require sensitive and careful handling. The initial investigation of this case did not look closely at the bank's process before recording a default but assumed error by the customer.

The husband and wife had a repayment holiday on their Home Loan due to financial difficulties. Repayments were to recommence on a set date and to come from a joint account. Before that date the marriage broke down and the wife left the family home.

The husband took responsibility for house payments. He transferred funds from his sole account to the joint account on the set date for the purpose of repayments to the Home Loan. ANZ attempted to debit the Home Loan repayment from the joint account on that date but as the sweep for funds is conducted in the early hours of the day the transaction was not processed and the funds remained in the account.

The next week the wife withdrew the funds from the joint account and the Home Loan fell into default. The husband who was unemployed with responsibility for the children was disadvantaged by the loss of funds. ANZ, while willing to consider hardship arrangements for the husband, refused to reimburse him on the basis that he should have credited the funds the day before the loan repayment was due. The assumption was made that the bank's processes had been properly implemented. The wife was requested to repay the funds without success. As it was a joint account she had a right to access the funds.

After the matter was referred to Customer Advocate it was discovered that ANZ's system should have tried to take the repayment from the joint account on two consecutive days before recording a payment default but failed to do so. This failure occurred because of human error. The customer was refunded the amount of the repayment and accepted this as a resolution of the matter.

Fair and reasonable resolution to interest rate dispute
The Customer Advocate frequently becomes involved in matters where the response by ANZ has been technically correct but the customer does not accept the outcome as fair and reasonable. The customer's fixed interest rate loan was due to expire on Saturday. He came to the branch on Thursday to refix the interest rate for one year at 8.85% and signed the letter of offer, the rate to commence on Monday. Later that day, the branch received advice that interest rates would rise. The branch attempted to have the customer's interest rate set at the day of application but this was declined by the business unit. The branch manager contacted the customer and advised him of his options. He could pay a Lock Rate fee of $912.00 which was far in excess of the cost of the interest rate rise. Given that the loan did not expire until the following day he could pay an Early Repayment fee of $300 and draw down the new loan at 8.85%. There would be a total saving to him of just over $200. The customer's initial complaint was declined. The customer understood that the response was technically correct but did not believe it was fair and reasonable. After speaking with the customer, the Customer Advocate recommended that a goodwill offer be made to reduce the interest rate to 8.85% to resolve the complaint.

Fair and reasonable resolution to interest rate dispute

The Customer Advocate frequently becomes involved in matters where the response by ANZ has been technically correct but the customer does not accept the outcome as fair and reasonable.

The customer's fixed interest rate loan was due to expire on Saturday. He came to the branch on Thursday to refix the interest rate for one year at 8.85% and signed the letter of offer, the rate to commence on Monday. Later that day, the branch received advice that interest rates would rise. The branch attempted to have the customer's interest rate set at the day of application but this was declined by the business unit. The branch manager contacted the customer and advised him of his options. He could pay a Lock Rate fee of $912.00 which was far in excess of the cost of the interest rate rise. Given that the loan did not expire until the following day he could pay an Early Repayment fee of $300 and draw down the new loan at 8.85%. There would be a total saving to him of just over $200.

The customer's initial complaint was declined. The customer understood that the response was technically correct but did not believe it was fair and reasonable. After speaking with the customer, the Customer Advocate recommended that a goodwill offer be made to reduce the interest rate to 8.85% to resolve the complaint.