commonwealth of australia royal … · i, oonald mark sillar, head of sales for anz wealth, a...

Contains Confidential Information ANZ.999 005.0001

COMMONWEALTH OF AUSTRALIA

Royal Commissions Act 1902 ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

WITNESS STATEMENT OF DONALD MARK SILLAR On behalf of Australia and New Zealand Banking Group Limited

No Document ID Document Paragraph

Witness statement of Donald Mark Sillar 1 dated 11 April 2018.

1 ANZ.800.233 .7779 Exhibit "DS-1", being a copy of the ANZ 19 Wealth Australia Appendix A: APL Rating Definitions.

2 ANZ.800A04.0291 Exhibit "DS-2", being a copy of ANZFP 20(a) Standard AIM Approved Product List dated 1 October 2015.

3 ANZ.800.206.3932 Exhibit "DS-3", being a copy of ANZFP 20(b) Standard Advice Process Step 2 Explore Client Options dated November 2017.

4 ANZ.800 .206A012 Exh ibit "DS-4", being a copy of ANZFP 20(c) Standard Advice Process Step 3 Prepare Advice dated November 2017.

5 ANZ.800.174.1197 Exhibit "DS-5", being a copy of ANZFP 20(d) Standard Replacement of Product dated August 2017 .

6 ANZ.800.173.8782 Exh ibit "DS-6", being a copy of ANZFP 20(e) Standard Best Interests Duty and Related Obligations dated November 2017.

7 ANZ.800A04.0337 Exhibit "DS-7", being a copy of ANZFP 20(f) Standard Best Interests Checklist dated 2 August 2015.

8 ANZ.800A04.0269 Exhibit "DS-8", being a copy of ANZFP 20(g) Standard Education and Tra ining dated March 2018.

9 ANZ.800.386.2581 Exhibit "DS-9", being a copy of ANZFP 20(h) Standard Conflicts of Interest dated March 2018.

10 ANZ.800A02 .2351 Exhibit "DS-10", being a copy ofthe 32 charter of the WIGF.

11 ANZ.800A47.0001 Exhibit "DS-11", being a copy of the 33 ~ charter for the APIC. C/J

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Contains Confidential Information ANZ.999.005.0002

12 ANZ.800.424.0360 Exhibit "DS-12", being a copy of the 34 charter for the ANZFP Distribution Forum.

13 ANZ.800.429.0026 Exhibit "DS-13", being a copy of ANZ 35(a) Wealth Managed Funds Approved Product List (APl) Framework (Australia) dated October 2017.

14 ANZ.800.426.0131 Exhibit "DS-14", being a copy of ANZ 35(b) Wealth Australia Platforms APl Framework dated February 2018.

15 ANZ.800 .233.7953 Exhibit "DS-15", being a copy of ANZ 35(c) Wealth Australia Annuities APl Framework Advice dated February 2018.

16 ANZ.800 .233 .7965 Exhibit "DS-16", being a copy of ANZ 35(d) Wealth Australia Insurance Bonds APl Framework dated February 2018.

17 ANZ.800.233.7976 Exhibit "DS-17", being a copy of ANZ 35(e) Wealth Australia Framework Document: Life Insurance APl dated February 2018.

18 ANZ.800.426.0120 Exhibit "DS-18", being a copy of ANZ 35(f) Wealth Australia Margin lending & Other Products APl Framework dated February 2018.

19 ANZ.800.426.0150 Exhibit "DS-19", being a copy of an 39 example of a paper submitted to the WIGF by the AR Team.

20 ANZ.800.165.1312 Exhibit "DS-20", being a copy of ANZ 48(a) Wealth Australia Conflicts of Interest Managed Funds, Direct Securities, Portfolio Management and Insurance, Annuities and Platforms dated August 2017.

21 ANZ.800.424.0383 Exhibit "DS-21", being a copy of Conflict 48(b) Management Plan Aligned Licensees dated October 2017.

22 ANZ.800.425.0001 Exhibit "DS-22", being a copy of Conflict 48(c) Management Plan ANZ Financial Planning dated 31 March 2017.

23 ANZ.800.409.0421 Exhibit "DS-23", being a copy of the 50(a) Non-APl Approval Process Guide for Advisers.

24 ANZ.800.369.3177 Exhibit "DS-24", being a copy of the 50(b) Non-APl Product A I Process

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Planner Guide.

25 ANZ.800 .369.3188 Exhibit "05-25", being a copy of the 56 ANZ Wealth Non-APL Framework dated September 2017.

26 ANZ.800.285.0075 Exhibit "OS-25A", being a copy of the 72 ANZBGL Group Conflict of Interest Policy dated June 2017.

27 ANZ.800.431.0035 Exhibit "05-26", being a copy of Best 75(e) Interests Outy and Related Obligations dated March 2016.

28 AN Z.800.431.0058 Exhibit "05-27", being a copy of 75(f) Replacement of Product Standard dated August 2017.

29 ANZ.800.431.0012 Exhibit "05-28", being a copy of 75(g) Conflicted Remuneration Standard dated Oecember 2017.

30 ANZ.800.166.8994 Exhibit "05-29", being a copy of Conflict 75(h) of Interest Standard including Anti-bribery and Anti -corruption dated April 2016.

31 ANZ.800.424.0298 Exhibit "05-30", being a copy of Aligned 82(c) Licensee Supervision Framework dated 23 August 2017.

32 ANZ.800.426.0008 Exhibit "05-31", being a copy of Aligned 82(d) Licensee - Practice Servicing Assessment Procedure Guide dated 15 August 2017.

33 ANZ.800.448.0028 Exhibit "05-32", being a copy of a 90 sample service level agreement.

I, Oonald Mark Sillar, Head of Sales for ANZ Wealth, a division of Australia and New Zealand Banking Group (ANZBGL), 833 Collins Street, Oocklands, in the State of Victoria, state as follows:

1. I am the Head of Sales for Wealth at ANZBGL. I have held this position since October 2011.

2. I am authorised to make this statement on behalf of ANZBGL and I do so, to the extent possible, from my own knowledge.

3. For the purposes of the preparation of this statement, where matters were not within my own knowledge, I have made enquiries of relevant employees of ANZBGL and reviewed documents of ANZBGL so as to provide me with an understanding about the matters referred to in the request (as defined below) . Enclosed is a schedule which contains a table listing employees of ANZBGL of whom I have made enquiries, and the subject matters they informed me about.

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4. Where in this statement I express an OpiniOn, it is an opinion I hold based on my experience in the financial services industry, and more particularly, my experience as an employee of ANZBGL.

5. I have prepared this statement in response to the request for a witness statement received by ANZBGL under cover of emails dated 28 and 29 March 2018 from the Australian Government Solicitor to Ashurst Australia, ANZBGL's solicitors in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Request). Where I refer in this statement to numbered questions, those questions have been extracted from the request.

6. For the purpose of this statement references to:

(a) "AR Team", means the ANZ Wealth Advice Research Team;

(b) "Investment Platform", is an administration and reporting service that allows an investor to hold a portfolio of individual managed funds, term deposits, cash, shares and other investments in the one account;

(c) "Product", means an investment product, Investment Platform, superannuation and insurance product (this definition is used for my answers to questions 1 to 4 and 7 to 9 below only); and

(d) "Wealth Entities", means ANZ Financial Planning, RI Advice Group pty Ltd, Millennium 3 Financial Services pty Ltd and Financial Services Partners Pty Limited.

QUALIFICATIONS AND EXPERIENCE

7. I graduated with a Bachelor of Business Studies, University of Technology, Sydney in 1987 and subsequently completed a Graduate Diploma in Applied Finance & Investment and my professional qualifications as a CPA.

8. My experience within the finance industry spans over 25 years across both domestic and international markets and includes roles in sales, operations and business management. My focus has primarily been on retail life insurance, wrap and master trust platforms, investment management, corporate superannuation and online stockbroking.

9. I commenced employment with ANZBGL in May 2010.

10. I have held various roles during the course of my employment with ANZBGL, including the following:

(a) Head of Sales at ANZ Wealth since October 2011; and

(b) Head of Broking Services at E*Trade Australia (May 2010 to October 2011).

RESPONSIBILITIES

11. In my current role as Head of Sales I am responsible for leading ANZ Wealth's national sales team to promote insurance and platform products to Australian AFSL's and their authorised representatives. These products include OneCare insurance and OnePath platform solutions.

RESPONSE TO QUESTIONS IN THE REQUEST

12. Where I set out below in this statement information as to the processes, procedures, policies and other frameworks which are adopted by ANZBGL and the Wealth Entities, I have done so by reference to those which I am informed are presently in effect (unless otherwise indicated). Confidential

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13. In the time available to me to prepare this statement, I have been unable to determine the changes, if any, to the processes, procedures, policies and other frameworks which have occurred since 2013. Furthermore, I have been unable to identify the exact date or dates in which each of the processes, procedures, policies and other frameworks came into effect. However, I note a number of the documents which are exhibited to this document contain on their face the information as to the dates on which each of the processes, procedures, policies and other frameworks came into effect.

B. APPROVED PRODUCT LISTS AND IN-HOUSE PRODUCTS

Question 1 What is the purpose of the approved product list? What is the effect of a product being included on the approved product list?

14. ANZBGL maintains a master approved list for each product type (the Master APLs). The Master APLs are managed by the ANZ Wealth Advice Research team (the AR Team). However, the addition, change of status and removal of Products from the Master APLs is subject to approval from other bodies as described in my answer to question 3 below.

15. Each of the Wealth Entities maintain Individual Licensee Approved Product Lists (each an approved product list (the APL)), which are managed by referencing Products from the Master APLs.

16. The Master APLs are lists of a broad range of Products which have been reviewed and assessed (by the processes and procedures which are described in detail below) as being suitable for financial advisers to recommend to clients and enable the financial advisers to meet their best interest duty and related obligations.

17. The central purpose of the APL for the Wealth Entities is to support financial advisers to meet their regulatory obligations and in particular their best interest duty and related obligations. This is achieved, for example, by providing financial advisers with research on, and assessment of, the Products. Other purposes of the APL include:

(a) to manage product related risk across the Wealth Entities; and

(b) to provide governance control (for example, to allow targeted training to be provided and also assist in the monitoring of financial advisers in relation to the Products they can recommend from the APL).

18. The effect of a Product being included on the APL is:

19.

(a) subject to the Product's specific rating and the financial adviser's accreditation, a financial adviser is authorised to provide financial advice in respect of, and recommend, that Product; and

(b) the Product is subjected to ongoing review and monitoring by the AR Team and its specific rating is subject to being changed.

Financial advisers are also able to recommend Products that are not on the APL through a process which is described in my answer to question 4 below.

The specific ratings which are referred to in paragraph 18(b) above are described in the ANZ Wealth Australia Appendix A: APL Rating Definitions, a copy of which is at Exhibit "DS-l" [ANZ.800.233.7779].

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Question 2

ANZ.999 005.0006

What guidance do ANZBGL and the Wealth entities provide to financial advisers and paraplanners about how to choose products from the approved product list? In particular, what guidance is given about choosing between equivalent products?

20. The guidance that is provided by ANZBGl and the Wealth Entities to financial advisers as to how to choose one or more Products from the APl is that the choice is subject to the overarching best interest duty and related obligations on the financial adviser. I am informed that guidance in relation to these overarching obligations is encapsulated in various documents which are provided to the financial advisers. These documents are in the form of Professional Standards and rules that ANZFP and ADG advisers must adhere. The Professional Standards address topics concerned with adviser's legal obligations, but also the non-legal standards that are imposed on them by ANZBGl and the Wealth Entities. For example, for ANZFP, I refer to:

(a) ANZFP Standard AIM Approved Product List dated 1 October 2015, a copy of which is at Exhibit "OS-2" [ANZ.800A04 .0291], provides guidance on the ANZFP APl and recommending a non-APl Product;

(b) ANZFP Standard Advice Process Step 2 Explore Client Options dated November 2017, a copy of which is at Exhibit "OS-3" [ANZ.800.206.3932], sets out the research requirements for advisers when considering recommending a Product to clients;

(c) ANZFP Standard Advice Process Step 3 Prepare Advice dated November 2017, a copy of which is at Exhibit "OS-4" [ANZ.800 .206A012], provides guidance on the considerations advisers must take into account when recommending a Product and their product disclosure obligations;

(d) ANZFP Standard Replacement of Product dated August 2017, a copy of which is at Exhibit "OS-5" [ANZ.800.174.1197], sets out the requirements that must be met and considerations taken into account when replacing a customer's existing Product;

(e) ANZFP Standard Best Interests Duty and Related Obligations dated November 2017, a copy of which is at Exhibit "OS-6"[ANZ.800.173.8782];

(f) ANZFP Standard Best Interests Checklist dated 2 August 2015, a copy of which is at Exhibit "OS-7" [ANZ.800A04.0337], includes a step regarding investigating or recommending a Product;

(g) ANZFP Standard Education and Training dated March 2018, a copy of which is at Exhibit "OS-8" [ANZ.800A04.0269], sets out the Core and Extended Product accreditation requirements which must be met before advisers can provide advice in respect of Products on the APl. When recommending a Product that is not on the APl, advisers may also be required to complete additional Product accreditations as specified in the matrix in Appendix 1 of the Non-APl Product Approval Process Guide; and

(h) ANZFP Standard Conflicts of Interest dated March 2018, a copy of which is at Exhibit "OS-9" [ANZ.800.386.2581], provides guidance as to how advisers should manage conflicts of interests in relation to Products.

These particular standards are the ANZFP "branded" standards. Similar standards are issued by the ADGs under their own brands.

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Contains Confidential Information ANZ.999. 005.0007

21. ANZ Wealth also makes available to ANZBGL and AOG advisers technology platforms which assists the advisers in the product research/compare/replacement stage in order to satisfy their best interest duty and related obligations. The technology platforms which are provided to advisers are known as:

(a) "COIN" in relation to ANZFP; and

(b) "Xplan" in relation to the AOGs.

The AOGs and ANZFP also have access to "Chant West" and "Mercer IS", which are both external research and comparison service providers. The parent company of Xplan, IRESS, also provides risk insurance research ratings via a module known as "risk researcher" .

22. The product ratings provided for each of the Products listed in the APL provides particular guidance for advisers (as set out in Exhibit 05-1).

23. From time to time, financial advisers are provided with further guidance through research sessions at adviser inductions and ongoing CPO events.

24. In addition, the financial advisers are also provided guidance in relation to when there is no Product on the APL which meets a client's particular best interest requirements. This is discussed in my answer to question 4 below.

25. Paraplanners have a particular role within financial advisers' practices; their role is to draft documentary material and they are not to be involved in providing face to face advice to clients nor issuing statements of advice to clients.

26. Neither ANZBGL, nor the Wealth Entities, direct a financial adviser how to select one Product over another, nor direct a financial adviser how to choose between equivalent Products.

27. In some Product areas, guidance is provided to financial advisers to assist them in determining what is an appropriate Product or range of Products that should be recommended to a client depending on the client's objectives and risk profile. However, notwithstanding guidance which is provided, financial advisers are required to select a Product in accordance with their best interest duty and related obligations and the advisers must keep documented evidence demonstrating that they made reasonable investigations. This will include considering and comparing Products :

(a) already held by their clients;

(b) on the APL; and

(c) any other Product that the client asks them to consider.

Question 3 In respect of the period from 1 January 2013 to the present, describe the process by which products were added to or removed from the approved product list. In particular, identify:

28. In maintaining the APL, Products may be added, their status changed or they may be removed from time-to-time to ensure that the APL is aligned to the needs and circumstances of ANZFP's and the AOGs' client base and the risk appetite of the Wealth Entities.

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29 . As part of this process, the AR Team completes:

(a) an annual review and ongoing monitoring (including time critical changes) of each Product available on the APL to ensure that the available Products are of sufficient quality; and

(b) reviews and detailed considerations of Products not on the APL to ascertain whether new or additional Products ought to be added to the APL.

30. The reviews referred to in paragraph 29 above result in Products being added, changed and removed from the APL (the processes are generally the same).

31. The AR Team is a significant contributor to the process of adding or removing a Product from the APL. However, as described below, the AR Team is not directly involved in the decision making process; rather, the team provides relevant research advice (including recommendations) to allow members of:

(a) the Wealth Investment Governance Forum (WIG F) to approve the addition, change in status of or removal of Products from the Master APL; and, once a decision has been made by WIGF;

(b) the Advice Product Investment Committee (APle) to approve the addition, change or removal of a Product from the APL for the ADGs; and

(c) the ANZFP Distribution Forum to approve the addition, change or removal of a Product from the APL for ANZFP.

32 . The charter of the WIGF is at Exhibit "OS-10" [ANZ.800,402.2351] and the composition of the WIGF is set out in section 5 of that document. The responsibilities of the WIGF include:

(a) defining and ongoing oversight of the acceptable product criteria applicable to each Product offered to the Wealth Entities' clients (Section 3.1 N); and

(b) reviewing all additions, deletions and exceptions to the Master APLs (Section 3.1 0).

33. The charter for the APIC is at Exhibit "OS-ll" [ANZ.800.447.0001] and the composition of

the APIC is set out in section 6 of that document. Sections 3.2 and 3.3 of the charter deal with setting and maintaining the APLs.

34 . The charter for the ANZFP Distribution Forum is at Exhibit "OS-12" [ANZ.800,424.0360] and the composition of the ANZFP Distribution Forum is set out in section 5 of that document. Sections 2.2 and 2.3 of the charter deal with setting and maintaining the APLs.

35. The governance and approval process of the APL is described in the following key documents:

(a) ANZ Wealth Managed Funds Approved Product List (APL) Framework (Australia) dated October 2017, a copy of which is at Exhibit "OS-13" [ANZ.800,429.0026] at section 2;

(b) ANZ Wealth Australia Platforms APL Framework dated February 2018, a copy of which appears at Exhibit "OS-14" [ANZ.800,426.0131];

(c) ANZ Wealth Australia Annuities APL Framework Advice dated February 2018, a copy of which is at Exhibit "OS-15" [ANZ.800.233.7953] at section 4;

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(d) ANZ Wealth Australia Insurance Bonds APL Framework dated February 2018, a copy of which is at Exhibit "OS-16" [ANZ.800.233.7965] at section 4;

(e) ANZ Wealth Australia Framework Document: Life Insurance APL dated February 2018, a copy of which is at Exhibit "OS-17" [ANZ.800.233.7976] at section 3.4; and

(f) ANZ Wealth Australia Margin Lending & Other Products APL Framework dated February 2018, a copy of which appears at Exhibit "OS-18" [ANZ.800.426.0120].

36. The first step in the process of an addition or removal being made to the APLs is:

(a) the AR Team will identify new Products, gaps in the Products on the APL or Products on the APL which are no longer available (such as funds which have closed to new investors or products which have been terminated by the product manufacturer) or otherwise considered not appropriate to remain on the APL; and

(b) advisers will, from time-to-time, alert the AR Team to Products that they wish to be considered for addition/investigation to the APL as well as Products that they no longer consider to be relevant.

37 . The next step is that the AR Team will undertake a due diligence process whereby one or more members of the team will:

(a) research the particular Product in question. In doing so, consideration is given to external research providers such as Mercer, Lonsec, IRESS and Chant West as well as the research team's own assessment of the Product; and

(b) consider:

(i) how the Product will interact with particular product strategies of the ADGs/ANZFPs and their clients;

(ii) the suitability of the Product for the underlying clients and the ramifications for the clients particularly when considering whether a product ought to be recommended to be removed from the APL; and

(iii) the interaction of the Product with ANZ Wealth's risk appetite.

38. I am informed that the role and the policies and processes of the AR team in undertaking the matters referred to in paragraphs 36 and 37 are outlined in the frameworks set out at paragraph 35 above.

39 . The third step in the process is that the AR Team will submit its recommendations to the WIGF in the form of a research paper for approval. An example of a paper submitted to the WIGF by the AR Team is at Exhibit "OS-19" [ANZ.800.426.0150].

40. Members of the WIGF are required to consider the research papers submitted to it by the AR Team and confirm whether they support or dissent from the recommendation made in respect of the paper (see Section 7 of the WIGF charter).

41. In the event that the WGIF determines that a Product is to be added to, status changed or removed from the Master APL, the AR Team submits a research paper together with a notation of WIGF's position to APIC and the ANZFP Distribution Forum.

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(a) the persons or bodies who were responsible for decisions about the composition of the approved product list;

ANZ.999 005.00 10

42. The bodies who are responsible for decisions about the composition of the APLs are described in paragraphs 31 to 34 above.

(b) the persons or bodies who had oversight of decisions about the composition of the approved product list;

43. In addition to the bodies described in paragraphs 31 to 34 above, oversight of decisions about the composition of the APLs is undertaken by the WIGF which reports to, and is subject to oversight by, the Wealth Australia Product Committee (WAPC).

(c) whether any of the persons referred to in 3(a) or (b) had any association with product manufacturing or the provision of financial advice on behalf of the Wealth entities;

44. None of the members of the WIGF provide any financial advice on behalf of the Wealth Entities.

45. There are members of the WIGF who are associated with ANZ's product manufacturing business, these are: the Managing Director of Pensions and Investments (presently, Peter Mullin); the Head of Assurance and Compliance Pensions and Investments (presently, Caroline James); the Chief Investment Officer (presently, Mark Rider); the Head of Chief Investment Office Governance (presently, Orla Cowan) and the Head of Portfolio Management (presently, Manish Utreja). Another member of WIGF is Alexandra Parker who is the Advisory Portfolio Manager, who sits within a division of ANZ Wealth which is associated with the provision of financial advice.

46. Both the APIC and the ANZFP Distribution Forum include persons who are involved in provision of financial advice on behalf of one or more of the Wealth Entities.

(d) the matters that were taken into account in determining the composition of the approved product list;

47. The matters which are taken into account in determining the composition of the APLs are:

(a) referred to in paragraphs 36 to 37 above;

(b) set out in APL Framework documents referred to in paragraph 35 above; and

(c) set out in the research papers submitted to the WIGF, the APIC or the ANZ Distribution Forum by the AR Team.

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(e) the processes or procedures adopted by ANZBGL and the Wealth entities to manage conflicts of interest in connection with decisions about the composition of the approved product list.

48. The processes and procedures which are adopted to manage conflicts of interest in connection with decisions about the composition of the APL are set out in:

(a) ANZ Wealth Australia Conflicts of Interest Managed Funds, Direct Securities, Portfolio Management and Insurance, Annuities and Platforms dated August 2017 (in particular at sections 4 and 5), a copy of which is at Exhibit "05-20" [ANZ.800.165.1312];

(b) Conflict Management Plan Aligned Licensees dated October 2017, a copy of which is at Exhibit "05-21" [ANZ.800A24.0383];

(c) Conflict Management Plan ANZ Financial Planning dated 31 March 2017, a copy of which is at Exhibit "05-22" [ANZ.800A25.0001];

(d) section 8.3 of the WIGF charter which is referred to at paragraph 32 above;

(e) section 7 of the APIC charter which is referred to at paragraph 33 above;

(f) section 6 of the ANZFP Distribution Forum charter which is referred to at paragraph 34 above; and

(g) the conflicts of interest section in each of the research papers submitted by the AR Team.

Exhibit key documents (e.g. policies) describing the process by which products were added to or removed from the approved product list.

49. I am informed that the key documents are those which have been exhibited in my answers set out in paragraphs 28 to 48 above.

Question 4 In respect of the period from 1 January 2013 to the present, describe the process by which exceptions or waivers were granted to allow financial advisers to recommend products that were not on the approved product list. In particular, identify:

50. The process by which exceptions or waivers are granted to allow financial advisers to recommend Products that are not on the APL is described in detail in:

(a) with respect to the ADGs, the Non-APL Approval Process Guide for Advisers (a copy of which is at Exhibit "05-23" [ANZ.800A09.0421]); and

(b) with respect to ANZFP, the Non-APL Product Approval Process Planner Guide (a copy of which is at Exhibit "05-24" [ANZ.800.369.3177]).

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51. The following decision tree (extracted from the Non-APL Approval Process Guide for Advisers referred to at paragraph 50(a) above) provides an overview of the process that an ADG financial adviser must follow when considering a non-APL Product:

ku ttntI rov--"'-" "" ___ 10' c.. ....... _""'"'r>1

[--~ ..• ----'

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- 1-a -t

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52. The following diagram (which is extracted from the Non-APL Approval Process Guide for Advisers referred to at paragraph 50(a) above) provides an overview of the overall nonAPL approval process relating to advice research:

Automatic Approval

Meets the 1000 no: (I) fl19 c Product Unfvcrsc,

(D) EJdsUng Exposure, (m) Product SultabUlty, InSl

Research Approval

Adviser 1$ unable to demonsttate best Interest (or recommendtng Hon-APL product.

Approval

\Vhere the Non-APt. product ctoes not meet tho research minimum rating criteria but Is In the dfent's best Interest to retAlln.

53. I am informed that the decision tree is not materially different for ANZFP, however the process by which the advisers submit the non-APL request and are notified of approvals does differ due to different operating systems and technology platforms.

54 . As outlined in the material referred to above, there is a three stage approval process (which is described below with respect to the ADGs - a similar process is applied with respect to ANZFP):

(a) "Automatic Approvals" - a Product is eligible for an automatic approval (which is granted via an online lodgement of the approval request) if:

(i) the client is currently invested in the non-APL Product and the adviser can demonstrate that switching out of the existing Product is contrary to the needs and objectives of the client;

(ii) the non-APL Product meets the needs and objectives, as well as the risk tolerances of the client; and

(iii) the Product is an industry super fund, public sector super fund or a platform L Product that meets specified quality hurdles. ~

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If no automatic approval is granted, then it is considered by the "Research Approval" process;

(b) "Research Approvals" - the AR Team is responsible for this stage of the approval process. As part of this approval process, the team is required to verify that the non-APL Product has a favourable rating from a preferred external research provider and the adviser has suffiCiently demonstrated client suitability. If those criteria are satisfied, then the AR Team is able to grant the non-APL approval. If not, it then shifts to be considered by the "Best Interest Approval" process; and

(c) "Best Interest Approval" - ANZ's Professional Standards team is responsible for this stage of the approval process (this sits within the Aligned Licensee and Advice Standards Division of ANZ Wealth (ALAS) and is generally responsible for developing and maintaining the professional standards which provide the rules that the financial advisers must adhere to ensure that they are giving advice that is compliant with the regulatory requirements and any other additional requirements imposed upon them by ANZBGL. Where the non-APL Product does not meet the research minimum rating criteria but the financial adviser believes the Product is in the client's best interest to retain, the Professional Standards team will assess the non-APL Product request. Best Interest Approval may be granted in the following (non-exhaustive) list of scenarios:

(i) the client has no choice of super fund;

(ii) keeping existing insurance held within super due to pre-existing medical conditions;

(iii) to maintain employer contribution above the minimum contributions;

(iv) insurance paid for by employer;

(v) pension grandfathered for Centrelink;

(vi) fund is part of a defined benefit scheme;

(vii) whole of life policy;

(viii) client will incur significant capital gains tax; and

(ix) client will incur significant exit fee.

55. If no approval is granted, the adviser is required to decline to advise. I am informed that non-APL approvals which are granted are valid for 18 months in all instances.

56. The Research Approval and Best Interest Approval is described in further detail in the ANZ Wealth Non-APL Framework dated September 2017 (a copy of which is at Exhibit "05-25" [ANZ.800.369.3188]).

(aJ the persons or bodies who were responsible for decisions about granting exceptions or waivers;

57. As referred to above, the bodies which are responsible for decisions about granting exceptions or waivers are:

(a) the AR Team; and

(b) ANZ's Professional Standards team.

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(b) the persons or bodies who had oversight of decisions about exceptions or waivers;

58. The AR Team manages the non-APL approval process. It reports monthly to APIC and ANZFP Distribution Forum the number of approvals granted and any issues that are required to be investigated such as obvious trends and whether there are Products that may need to be added onto the APL.

59. I am informed that the Professional Standards team reports to Conrad Travers who is the Head of Professional Development.

60. I am informed that the AR Team also provides a quarterly report to the Licensee Risk & Compliance Board Committee. This report includes details of trends and any emerging risks identified during the collection of non-APL information.

(c) whether any of the persons referred to in 4(a) or (b) had any association with product manufacturing or the provision of financial advice on behalf of the Wealth entities;

61. No member of the AR Team nor the Professional Standards Team provides any financial advice on behalf of the Wealth Entities or are associated with product manufacturing.

62. The AR Team and the Professional Standards team sit within a division of ANZ Wealth which is associated with the provision of financial advice.

(d) the matters that were taken into account in determining whether exceptions or waivers should be granted;

63. The matters which are taken into account in determining whether exceptions or waivers should be granted are referred to in paragraphs 50 to 56 above.

(e) the processes or procedures adopted by ANZBGL and the Wealth entities to manage conflicts of interest in connection with decisions about exceptions or waivers.

64. In addition to the processes and procedures which are adopted in relation to the non-APL Approval Process, the processes and procedures which are adopted to manage conflicts of interest in connection with decisions about exceptions or waivers are set out in ANZ Wealth Australia Conflicts of Interest Managed Funds, Direct Securities, Portfolio Management and Insurance, Annuities and Platforms dated August 2017 which is referred to at paragraph 48(a).

Exhibit key documents (e.g. policies) describing the process by which exceptions or waivers were granted.

65. I am informed that the key documents are those which have been exhibited in my answers set out in paragraphs 50 to 64 above.

Confidential

15


Question 5

(aJ

To the extent that the information is readily available, for each calendar year from 1 January 2013 to the present, set out:

the proportion of products on the approved product list that were in-house products;

66. I am informed that the proportion of products on the APLs that were in-house products for the calendar years 2013 to date is set out in the table below.

ANZFP FSP M3 RI

In-house 71 26 22 27

Total 181 277 314 327

2013 Proportion 39% 9% 7% 8%

In-house 67 23 19 24 \

Total 175 268 286 319

2014 Proportion 38% 9% 7% 8%

In-house 31 42 40 43

Total 131 402 481 433

2015 Proportion 24% 100/0 8% 10%

In-house 49 52 51 54

Total 190 600 672 615

2016 Proportion 26% 9% 8% 9%

In-house 49 57 56 59

Total 180 493 547 514

2017 Proportion 27% 120/0 100/0 11%

In-house 46 51 50 52

Total 180 506 499 520

2018 Proportion 26% 100/0 100/0 10%

67. I am informed that the analysis set out above was undertaken using the following assumptions:

(a) all in-house managed funds use external managers to manage the money but some products have multiple managers that include active overlay, active blending

Confidential 16


or have functions that are done in-house (for example diversified funds where asset allocation decisions are made, internal gearing and hedging etc);

(b) the products referred to in subparagraph (a) above were considered in-house as well as bank term deposits and cash accounts, which were also on the APL;

(c) white labelled products that were solely managed by one external investment manager were still deemed to be externally managed (for example, Onepath Australian shares is solely managed by UBS so it was deemed that the manufacturer in this case to be external);

(d) there were 12 products deemed to be white labelled that were externally managed; and

(e) all One Path insurance products were deemed to be in-house.

68. I am also informed that:

(a) the analysis referred to above was conducted on the APLs that were current as at January in each calendar year where available. This was the case for all years except for the 2013 calendar year where July data was used due to it being readily available;

(b) products were defined as including managed funds, insurance, platforms and other products such as annuities, insurance bonds etc;

(c) from 2013-2015 platforms, insurance and other products were not directly located in the source file for the APLs so these products were not included in the APL analysis for these periods for each group. These were added in 2015 which accounts for the increase in in-house products and total products on the APL in 2016;

(d) while the 2013-2015 data only included managed funds, the proportion of insurance, platforms and other products deemed to be in-house products was lower than the proportions provided for the managed funds during those periods. The total proportions for those periods would therefore be lower if all the data was captured; and

(e) for ANZFP in 2015, there was a drop in products on the ANZFP APL as a result of term deposit products being consolidated from previously being individually itemised on the 2014 APL.

(b) the proportion of new clients of each Entity who invested funds in, or paid insurance premiums in respect of, one or more in-house products;

69. I am informed that there is no information which is readily available which differentiates new and existing clients which enables me to answer this question.

70 .

(c) the total amount of funds invested in, or insurance premiums paid in respect of, in-house products by new clients of each Entity;

I am informed that there is no information which is readily available which differentiates new and existing clients which enables me to answer this question.

Confidential 17

Contains Confidential Information ANZ.999.005.001 8

(d) the proportion of funds invested in, or insurance premiums paid in respect of, inhouse products (as opposed to external products) by new clients of each Entity;

71. By reason of the answers to questions S(b) and (c) above, I am informed that there is no information which is readily available which enables me to answer this question.

Question 6 In respect of the period from 1 January 2013 to the present, describe the processes and procedures adopted by ANZBGL and each Entity:

(a) to manage conflicts of interest in connection with decisions by employed financial advisers and authorised representatives of the Wealth entities to recommend inhouse products; and

72. I have identified in my answers to questions 3 and 4 above, the processes and procedures adopted by ANZBGL and the Wealth Entities to manage conflicts of interest when answering those questions. I am informed that the ANZBGL g~oup policies in relation to conflicts of interest also apply to ANZFP financial advisers. These group policies are imported into the standards applicable to the ADG authorised representatives. A copy of the ANZBGL Group Conflict of Interest Policy dated June 2017 is at Exhibit "DS-25A" [ANZ.800.28S.007S] .

73 . As I have referred to above, advisers must act in the best interests of their clients in all situations. This is described, for example, in the Best Interests Duty and Related Obligations policy which is referred to in paragraph 7S(e) below and requires compliance with "safe harbour" obligations. These are expressed in the following terms:

74.

(a) identify the client's objectives, financial situation and needs as stated by the client;

(b) identify:

(i) the subject matter of the advice sought by the client (whether stated or implied); and

(ii) the client's objectives, financial situation and needs that are relevant to the advice sought;

(c) satisfy yourself that you have complete and accurate information about the client's relevant circumstances and, if you don't, take reasonable steps to obtain it;

(d) decide if you have the expertise to provide the client with the advice sought and, if not, decline to provide the advice (you may also refer the client to another adviser);

(e) if you decide to recommend a financial product: investigate and assess relevant financial products that might achieve the client's objectives and needs;

(f) base your advice on the client's circumstances; and

(g) take any other step that would be regarded as being in the client's best interests.

Further, the Product Replacement Standard, which is referred to in paragraph 7S(f) below, provides guidance to a financial adviser when considering product replacement for a new

Confidential 18


client which requires the financial adviser to decide between products on the APL and products that the client already holds.

75. In addition to those matters, the following processes and procedures are adopted to manage conflicts of interest in connection with decisions by employed financial advisers and authorised representatives of the Wealth Entities when recommending in-house products:

(a) Conflict Management Plan Aligned Licensees dated October 2017, which is referred to at paragraph 48(b) above;

(b) Conflict Management Plan ANZ Financial Planning dated 31 March 2017, which is referred to at paragraph 48(c) above;

(c) ANZFP Conflicts of Interest Standard released March 2018, a copy of which is referred to at paragraph 20(h) above;

(d) ANZ Wealth Australia Conflicts of Interest Managed Funds, Direct Securities, Portfolio Management and Insurance, Annuities and Platforms dated August 2017 which is referred to at paragraph 48(a) above;

(e) Best Interests Duty and Related Obligations dated March 2016, a copy of which is at Exhibit "OS-26" [ANZ.800.431.0035];

(f) Replacement of Product Standard dated August 2017, a copy of which is at Exhibit "OS-27" [ANZ.800.431.0058];

(g) Conflicted Remuneration Standard dated December 2017, a copy of which is at Exhibit "OS-28" [ANZ.800.431.0012]; and

(h) Conflict of Interest Standard including Anti-bribery and Anti-corruption dated April 2016, a copy of which is at Exhibit "OS-29" [ANZ.800.166.8994].

Similar standards are held by the various Wealth Entities. Conflicts of interest are also dealt with in RI's business rules documents, M3's business rules documents and in FSP's Professional Standards Manual.

(b) in connection with the provision of financial advice to new clients who have existing financial products;

76. There are no additional processes and procedures which are adopted beyond those described in paragraph 75 above.

Exhibit key documents (e.g. policies) describing those processes and procedures.

77. I have exhibited the key documents in my answer in the paragraphs above.

Confidential 19


C. CONFLICTED REMUNERATION

Question 7

Question 8

Question 9

Since 1 July 2013, have any of A NZBGL, an Entity, or an associated entity (within the meaning of Div 6 of Pt 1.2 of the Corporations Act 2001 (Cth)) or subsidiary of ANZBGL or an Entity provided benefits (monetary or non-monetary) to financial advisers that could reasonably be expected to influence:

a. the choice of financial product recommended by a financial adviser; or

b. the financial advice given by a financial adviser?

Since 1 July 2013, have any of ANZBGL, an Entity, or an associated entity (within the meaning of Div 6 of Pt 1.2 of the Corporations Act 2001 (Cth)) or subsidiary of ANZBGL or an Entity provided benefits (monetary or non-monetary) to persons associated with financial advisers (for example, research staff) that could reasonably be expected to influence:

a. the choice of financial product recommended by a financial adviser; or

b. the financial advice given by a financial adviser?

For each type of benefit referred to in 7 and 8 above:

a. describe the nature of the benefit provided, and the period for which it was provided;

b. describe how the benefit might reasonably be expected to influence:

i. the choice of financial product recommended by a financial adviser; or

ii. the financial advice given by a financial adviser;

c. for each calendar year from 1 July 2013 to the present, set out the total value of the benefit provided;

d. describe the reasons why the relevant entity decided to provide the benefit; and

e. if applicable, describe the reasons why the relevant entity decided to stop providing the benefit.

78. My answers to questions 7 to 9 are set out below.

79. In answering these questions I have included in the answer any benefits which are provided to financial services licensees because typically it is unusual for benefits to be paid directly to financial advisers.

80. Also, in answering these questions I have assumed that the questions are directed at whether ANZBGL or the Wealth Entities have contravened the conflicted remuneration regime as set out in the Corporations Act. In doing so, because of the time available to prepare this statement, I have limited my response to the key ANZ Wealth entities which are involved in the manufacture of, and advice in relation to, Products. (I am informed that there are in excess of 50 individual associated entities within ANZ Wealth which may be involved in the manufacture of, and advice in relation to, Products.) These are:

Confidential 20

ANZ.999.005.0021 Contains Confidential Information

(a) in relation to insurance:

(i) OnePath Life Limited; and

(ii) OnePath General Insurance pty Limited;

(b) in relation to superannuation and investments:

(i) OnePath Custodians Pty Limited;

(ii) OnePath Funds Management Limited;

(iii) OASIS Fund Management Limited; and

(iv) Share Investing Limited (formerly known as E*Trade Australia); and

(c) in relation to financial planning, the Wealth Entities.

81. I am informed by each of the heads of the relevant entities referred to in subparagraphs 80(a) to 80(c) above that, to the best of their knowledge, since 1 July 2013, these entities have not provided benefits in contravention of the conflicted remuneration regime as set out in the Corporations Act or, the benefits which may have been provided to financial advisers or their licensee, were subject to specific exemptions (such as, life insurance and "grandfathering").

Question 10 In respect of the period from 1 July 2013 to the present, describe the processes and procedures adopted by ANZBGL and each Entity to prevent and detect instances of employed financial advisers or authorised representatives of the Wealth entities receiving conflicted remuneration in contravention of Div 4 of Part 7.7A of the Corporations Act 2001 (Cth). Exhibit key documents (e.g. policies) describing those processes and procedures.

82 . I have referred in my answer to questions 3, 4 and 6 above to the processes and procedures which are adopted to manage conflicts of interest more generally. In addition to these general processes and procedures, I am informed that ANZBGL and each Wealth Entity has specific processes and procedures in place to prevent and detect instances of employed financial advisers or authorised representatives from receiving conflicted remuneration. The particular processes and procedures are:

Confidential

21


(a) Conflicted Remuneration Standard dated December 2017, referred to at paragraph 75(g) above. This standard sets out the requirements and guidance which the financial advisers must comply with in relation to conflicted remuneration and other banned remuneration which was introduced through the FOFA reforms. The standard sets out what is considered to be conflicted remuneration and provides a decision tree to facilitate financial advisers in ascertaining whether remuneration which might be provided falls within the definition of conflicted remuneration. This decision tree is reproduced below;

..... ~ ... -.. ----..... .., ......... .....,-- .... ..., ---....... , ,~ --...................... .................... ....... - ... ..-.. -. ., ............ ..-.. .. _. ~ ................ .. -..................... . , ........... --

........... -----_ ....... -................... • ......... 4" .. --...... . .-..........-............... , .. -,--

....... ~ ..... ................ -_ .. 0·,-........ • ...... ..................... ........... .......................... .... .............. .. --...... , ..... ........ ....... ....... aI ...... . ........................

(b) Conflict Management Plan ANZ Financial Planning dated 31 March 2017, referred to at paragraph 4S(c) above. The purpose of this plan is to document how ANZFP complies with its requirement to have in place adequate arrangements for the management of its conflicts of interest. The document:

(i) identifies the key and potential conflicts that exist;

(ii) assesses the conflicts impact;

(iii) explains the controls that are relied on to effectively identify, report and manage conflicts; and

(iv) assesses the effectiveness of the controls;

(c) Aligned Licensee Supervision Framework dated 23 August 2017, a copy of which appears at Exhibit "OS-30" [ANZ.S00.424.029S]. The purpose of this framework is to provide an overview of the supervision which is provided by the practice managers of the financial advisers and to set out the steps to be taken by the practice managers to supervise the practices/advisers so as to minimise the risk; and

(d) Aligned Licensee - Practice Servicing Assessment Procedure Guide 15 August 2017, a copy of which is at Exhibit "OS-31" [ANZ.S00.426.000S]. This procedure guide sets out the steps to be adopted by the supervisors in completing the Practice Servicing Assessment (PSA) which is a review conducted by supervisors on individual financial advisers overall risk profile so as to identify potential red flags within a practice which would result in a particular financial adviser being placed on a watch list whereby that practice is then reviewed every month by the risk event forum.

Confidential

22


More generally, the ANZBGL's Anti-Bribery and Corruption policy also includes processes and procedures to prevent a financial adviser from receiving remuneration which may affect the financial advisers best interest obligations.

Question 11 Since 1 July 2013, have ANZBGL or the Wealth entities identified any instances of an employed financial adviser or authorised representative of an Entity receiving conflicted remuneration in contravention of Div 4 of Part 7.7 A of the Corporations Act 2001 (Cth)?

83. I am informed that, since 1 July 2013, ANZBGL and the Wealth Entities have not identified any instances of an employed financial adviser or authorised representative of an Entity receiving conflicted remuneration in contravention of Div 4 of Part 7.7A of the Corporations Act.

Question 12 For each calendar year from 1 July 2013 to present, how many such instances have ANZBGL or the Wealth entities identified?

84. I refer to my answer to question 11 above.

C. WHITE LABEL PRODUCTS

Question 13 Since 1 July 2013, has any of ANZBGL, an Entity, or an associated entity (within the meaning of Div 6 of Pt 1.2 of the Corporations Act 2001 (Cth)) or subsidiary of ANZBGL or an Entity (collectively, ANZ Entities) manufactured products specifically, platforms or investment products that are made available to an entity that provides financial advice (intermediary) to sell under its own branding (white label products)?

85. I am informed that, since 1 July 2013, no ANZ Entity has manufactured new products specifically, platforms or investment products that are made available to an entity that provides financial advice (intermediary) to sell under its own branding. However, since 1 July 2013 ANZ Entities have continued to make available and support existing products which are able to be sold under the name of an independent brand of a related entity of the relevant ADG.

23


Question 14 For each product of the kind referred to in 13 above:

(a) state the name of the product, and describe the nature of the product and the period for which it was manufactured;

ANZ.999 005.0024

86. I am informed that since 1 July 2013 ANZ Entities have made available and supported the following products:

Date Date

Name of the Nature of the Product closed to

terminated product product launch date

new clients (no remaining

clients) Dominion

Open Superannuation Super Wrap 1 June 2003 N/A Master Trust

product

Dominion Open

Portfolio IDPS 1 June 2003 N/A Service

product

Dominion Super Wrap for 1 February 30 June 16 December

Superannuation Plan

employees 2004 2012 2016

Matrix Open

Superannuation Super Wrap 1 January 2001 N/A Master Trust

product

Matrix Portfolio IDPS 1 January 2001

Open N/A

Service product Matrix

Super Wrap for 20 October 30 June 16 December Superannuation Plan

employees 2003 2012 2016

Mentor Open

Superannuation Super Wrap 1 January 2002 N/A Master Trust

product

Mentor Open

Portfolio IDPS 1 January 2002 N/A Service

product

Mentor Super Wrap for 1 February 30 June 16 December

Superannuation Plan

employees 2004 2012 2016

Wealthtrac 1 December Open

Superannuation Super Wrap N/A Master Trust

2001 product

Wealthtrac 1 December Open

Portfolio IDPS N/A Service

2001 product

Wealthtrac Super Wrap for 1 February 30 June 16 December

Superannuation Plan

employees 2004 2012 2016

Avenue 30 June 16 December

Superannuation Super Wrap 1 October 2002 2012 2016

Service

24


Name of the Nature of the Date

Date Product

product product closed to

terminated launch date (no remaining

new clients clients)

Avenue Investment lOPS 1 October 2002

30 June 16 December

Service 2012 2016

Aspire Superannuation Super Wrap 15 June 2009

31 October 16 December

Master Trust 2016 2016

Aspire Investment lOPS 15 June 2009

31 October 16 December

Service 2016 2016

Compass Superannuation Super Wrap 3 August 2009

30 June 16 December


Compass Investment lOPS 3 August 2009

30 June 16 December

Service 2012 2016

FSP Super 30

Fund Super Wrap 9 June 2009 September N/A

2013

FSP Prestige 30

Plus lOPS 9 June 2009 September N/A

2013 Imagine Wealth Superannuation Super Wrap

22 October 30 June 16 December

Master Trust 2007 2012 2016

Imagine Wealth Investment lOPS

22 October 30 June 16 December

Service 2007 2012 2016

Imagine Wealth Super Wrap for

Superannuation 22 October 30 June 16 December

Plan employees 2007 2012 2016

Make a Choice Superannuation Super Wrap 14 May 2007

30 June 16 December


Make a Choice Investment lOPS 14 May 2007

30 June 16 December

Service 2012 2016

Portfoliofocus Superannuation Super Wrap 1 June 2002

30 June 16 December


Portfoliofocus Investment lOPS 1 June 2002

30 June 16 December

Ser,vice 2012 2016

Portfoliofocus Super Wrap for

Superannuation 1 December 30 June 16 December

Plan employees 2003 2012 2016

Qwealth 25 Superannuation Super Wrap 15 May 2008 November

16 December


Qwealth 25 Investment lOPS 15 May 2008 November

16 December

Service 2016 2016

Confidential

25

ANZ.999 005.0026 Contains Confidential Information

Date Date

Name of the Nature of the Product closed to

terminated product product launch date

new clients (no remaining

clients) Strategy

30 June 16 December Retirement Super Wrap 1 July 2000

2012 2016 Fund Strategy

30 June 16 December Portfolio lOPS 1 July 2000

2012 2016 Service Strategy

Super Wrap for 30 June 16 December Superannuation

employees 1 March 2004

2012 2016 Plan

SWMS Super 25

16 December Super Wrap 4 January 2011 November

Wrap 2016

2016

SWMS Investor 25

16 December Wrap

lOPS 4 January 2011 November 2016

2016 SWMS Private 25

16 December Client Super Super Wrap 4 January 2011 November

2016 Wrap 2016 SWMS Private 25

16 December Client Investor lOPS 4 January 2011 November

2016 Wrap 2016

87. I am informed that the following definitions have been adopted when compiling the table set out above :

88.

(a) "Super Wrap" is an administration service that allows investors to hold a wide range of superannuation investments (such as, managed funds, separately managed accounts, individually managed accounts, direct shares, term deposits, cash investments and insurance) within a transacting and reporting platform. The offering is governed by a trust deed overseen by an independent trustee. It is predominantly used by financial advisers to provide centralised reporting and flex ibil ity for managing their customers' superannuation and retirement savings in a single solution;

(b) "Super Wrap for employees" is the same as Super Wrap (see subparagraph (a) above) but is restricted to members of an employer plan; and

(c) "lOPS" (which stands for Investor Directed Portfolio Service) is a wrap account that invests non-superannuation money under a bare trust structure, where the operator holds assets on behalf of the customer, and acts on the instruction of the customer.

(b) describe the terms on which the product was made available to intermediaries to sell under their own branding;

I am informed that white label products are made available to intermediaries under agreements between an ANZ Entity and a promoter or distributor. Each of the agreements under which white label products are distributed are different but all include similar key terms.

Confidential

26


89. The agreements to provide white label products to intermediaries to sell under their own branding generally include:

(a) the term of the agreement, termination provIsions, disengagement procedures, warranties, indemnities and confidentiality;

(b) the products to be offered, fees payable by clients, administrative service standards and online services available for the products;

(c) agreement for the use of the promoter's or distributor's brand;

(d) promoter or distributor obligations including promotion and distribution activities, adviser training and business development, reviewing and recommending investment options, Anti-Money Laundering and Counter-Terrorism Financing obligations and regulatory licencing requirements;

(e) fees payable to the promoter or distributor; and

(f) compliance obligations of the ANZ Entity.

90. A copy of a sample service level agreement is at Exhibit "05-32" [ANZ.800.448.0028].

(c) describe any fees payable by intermediaries to any ANZ Entities in respect of the product;

91. I am informed that there are no fees payable by intermediaries to any ANZ Entities in respect of the white label products. End clients pay fees directly to the ANZ Entities and the ANZ Entities pay a distributor or promoter fee to the intermediary.

(d) if known, describe any fees charged by intermediaries to their clients in respect of the product;

92. I am informed that there is a single adviser fee arrangement which comprises:

(a) intermediaries may charge their clients an Adviser Service Fee in respect of the white label products. The fee is charged to cover services provided by the adviser in respect of strategic planning and implementing and evaluating the client's investment strategy to help them reach their financial goals. The fee may also cover implementing ongoing account transactions; and

(b) the adviser may clarify and agree an Adviser Service Fee arrangement with their client. The actual amount payable can include an Ongoing Adviser Service Fee (flat dollar or percentage of a client's account balance) or a One-off Adviser Service Fee (flat dollar only).

(e) if known, describe any services offered by intermediaries to their clients in respect of the product.

93. As the white label products are only available through advisers, the products are required to be supported by the intermediaries through the provision of financial advice.

Confidential

27


Question 15 Do the fees payable by end clients to intermediaries in respect of white label products manufactured by ANZ Entities typically exceed the fees payable by intermediaries to ANZ Entities in respect of such products?

ANZ.999.005.0028

94. As stated in my answer to question 14(c), I am informed that there are no fees payable by intermediaries to ANZ Entities in respect of the white label products. End clients pay fees directly to the ANZ Entities and the ANZ Entities pay a distributor or promoter fee to the intermediary.

Question 16 If so, what value do the end clients receive for the additional fees?

95. I refer to my answer to question 15.

I have read the content of this my witness statement and I am satisfied that it is true and correct to the best of knowledge, information and belief.

Signed:

Donald Mark Sillar

Dated: 11 April 2018

Witnessed:

S. .kv·h~n~ .. ....... s. .r.-:Y..lR..~ .................. . Signature:

C-.-~ .................. .

28

ANZ.999.005.0029 Contains Confidential Information

Schedule

ANZ employee Topic on which information was provided

Leonardo Mauceri Question 1

Andrew Waller, Leonardo Mauceri and Darren Questions 2, 3 and 4 Williams

Aidan Haines Question 5

Darren Williams and Andrew Waller Question 6

Shez Ford Questions 7, 8 and 9 with respect to ANZFP

Peter Ornsby Questions 7, 8 and 9 with respect to RI

Matthew Brown Questions 7, 8 and 9 with respect to M3jFSP

Darren Whereat Questions 7, 8 and 9 with respect to RI, M3 and FSP generally

Joong Harrison Questions 7, 8 and 9 with respect to the number of associated entities

Gavin Pearce Questions 7, 8 and 9 with respect to insurance

Peter Mullin Questions 7, 8 and 9 with respect to superannuation and investments

Darren Williams and Andrew Waller Question 10

Judite Lay Questions 11 and 12

Dean Faglioni Questions 13 to 16

29

ROYAL COMMISSIONINTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

CERTIFICATE IDENTIFYING EXHIBIT

Date of document: 11 April 2018Filed on behalf of: Australia and New ZealandBanking Group LimitedPrepared by: AshurstAddress: Level 26, 181 William StreetMELBOURNE VIC 3000

Tel: 03 9679 3000

Fax: 03 9679 3111

This is the exhibit marked "DS-1" now produced and shown to Donald Mark Sillar at the time of signing his witness statement on 11 April 2018.

Signature of witness

Exhibit "DS-1"ANZ Wealth Australia Appendix A: APL

Rating Definitions

30

ANZ.999.005.0030




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-2"ANZFP Standard AIM Approved Product

List dated 1 October 2015

31

ANZ.999.005.0031




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-3"ANZFP Standard Advice Process Step 2

Explore Client Options dated November2017

32

ANZ.999.005.0032




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-4"ANZFP Standard Advice Process Step 3

Prepare Advice dated November 2017

33

ANZ.999.005.0033




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-5"ANZFP Standard Replacement of

Product dated August 2017

34

ANZ.999.005.0034




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-6"ANZFP Standard Best Interests Duty

and Related Obligations datedNovember 2017

3S

ANZ.999.005.0035




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-7"ANZFP Standard Best Interests

Checklist dated 2 August 2015

36

ANZ.999.005.0036




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-8"ANZFP Standard Education and Training

dated March 2018

37

ANZ.999.005.0037




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-9"ANZFP Standard Confiicts of Interest

dated March 2018

38

ANZ.999.005.0038




Tel: 03 9679 3000

Fax: 03 9679 3111


7dSignature of witness

Exhibit "DS-10"Charter of the WIGF

39

ANZ.999.005.0039




Tel: 03 9679 3000

Fax: 03 9679 3111


s Signature of witness

Exhibit "DS-11"Charter for the APIC

40

ANZ.999.005.0040




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-12"Charter for the ANZFP Distribution

Forum

41

ANZ.999.005.0041




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-13"ANZ Weaith Managed Funds Approved

Product List (APL) Framework

(Australia) dated October 2017

42

ANZ.999.005.0042




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-14"ANZ Wealth Australia Platforms APL

Framework dated February 2018

43

ANZ.999.005.0043




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-15"ANZ Wealth Australia Annuities APL

Framework Advice dated February 2018

44

ANZ.999.005.0044




Tel: 03 9679 3000

Fax: 03 9679 3111

This is the exhibit marked "DS-16" now produced and shown to Donald Mark Siilar at the time of signing his witness statement on 11 April 2018.


Exhibit "DS-16"ANZ Wealth Australia Insurance Bonds

APL Framework dated February 2018

45

ANZ.999.005.0045




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-17"ANZ Wealth Australia Framework

Document: Life Insurance APL datedFebruary 2018

46

ANZ.999.005.0046




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-18"ANZ Wealth Australia Margin Lending &

Other Products APL Framework datedFebruary 2018

47

ANZ.999.005.0047



Date of document: 11 April 2018Filed on behalf of; Australia and New ZealandBanking Group LimitedPrepared by: AshurstAddress: Level 26, 181 William StreetMELBOURNE VIC 3000

Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-19"Example of a paper submitted to the

WIGF by the AR Team

48

ANZ.999.005.0048




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-20"ANZ Wealth Australia Conflicts of

Interest Managed Funds, Direct

Securities, Portfolio Management and

Insurance, Annuities and Platformsdated August 2017

49

ANZ.999.005.0049




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-21"Confiict Management Pian Aiigned

Licensees dated October 2017

50

ANZ.999.005.0050




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-22"Confiict Management Plan ANZ

Financiai Pianning dated 31 March 2017

51

ANZ.999.005.0051




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-23"Non-APL Approval Process Guide for

Advisers

52

ANZ.999.005.0052




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-24"Non-APL Product Approval Process

Planner Guide

53

ANZ.999.005.0053




Tel: 03 9679 3000

Fax: 03 9679 3111


j


Exhibit "DS-25"ANZ Wealth Non-APL Framework dated

September 2017

S4

ANZ.999.005.0054




Tel: 03 9679 3000

Fax: 03 9679 3111

This is the exhibit marked "DS-25A" now produced and shown to Donald Mark Sillar at the time of signing his witness statement on 11 April 2018.


Exhibit "DS-25A"ANZBGL Group Conflict of Interest

Policy dated June 2017

ss

ANZ.999.005.0055




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-26"Best Interests Duty and Reiated

Obiigations dated March 2016

56

ANZ.999.005.0056




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-27"Replacement of Product Standard dated

August 2017

57

ANZ.999.005.0057




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-28"Conflicted Remuneration Standard

dated December 2017

ss

ANZ.999.005.0058




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-29"Confiict of Interest Standard including

Anti-bribery and Anti-corruption datedAprii 2016

59

ANZ.999.005.0059




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-30"Aligned Licensee Supervision

Framework dated 23 August 2017

60

ANZ.999.005.0060




Tel: 03 9679 3000

Fax; 03 9679 3111



Exhibit "DS-31"Aligned Licensee - Practice Servicing

Assessment Procedure Guide dated15 August 2017

61

ANZ.999.005.0061




Tel: 03 9679 3000

Fax: 03 9679 3111



Exhibit "DS-32"

Sample service level agreement

62

ANZ.999.005.0062

commonwealth of australia royal … · i, oonald mark sillar, head of sales for anz wealth, a...

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