4.5 ANZ transaction

As already noted, ANZ has agreed to sell its superannuation business to IOOF. The Commission looked at how the ANZ trustee approached its role in that transaction.

OPC, Oasis and OnePath Life Limited (OnePath Life) are all subsidiaries of ANZ. They operate within the Pensions and Investments (P&I) business unit of ANZ Wealth, which is in turn a division of ANZ.[1] OPC and Oasis are both RSE licensees of regulated superannuation funds. OnePath Life is a life company. OPC is the RSE licensee of two regulated superannuation funds, the OnePath MasterFund (the MasterFund) and the Retirement Portfolio Service (the Retirement Portfolio). OPC issues a number of superannuation products through the MasterFund. Contributions into those products are invested through investment-linked life policies issued to OPC by OnePath Life. OnePath Life is also the administrator and group insurer of the MasterFund.[2]

ANZ has agreed to sell OPC and Oasis, and other parts of the P&I business, to IOOF Holdings.[3] At the time of the relevant hearings, the transaction had not been completed. ANZ has separately agreed to sell OnePath Life to Zurich Financial Services Australia Limited.[4]

The boards of OPC and Oasis were not consulted about the transaction.[5] They have no direct control over whether the transaction proceeds. However, a condition precedent of the transaction is that OPC redeem the investment-linked life policies issued by OnePath Life, and transfer the assets of the MasterFund to another superannuation fund. Either OPC or an IOOF company must be the trustee of that other fund.[6] The purpose of this condition is to separate the business being sold to IOOF Holdings from the business being sold to Zurich.[7]

The OPC Board must approve the redemption and transfer.[8] At the time Ms Weekes gave evidence, the board had given in principle approval to consider an SFT from the MasterFund to the Retirement Portfolio.[9] The board preferred this option, as it would have the least impact on members.[10] It would also have some benefits, including removing the complex investment structure (currently in place through OnePath Life’s life policies) without incurring capital gains tax.[11] However, the board had not decided whether to make the transfer. Ms Weekes said it would only do so if the transfer was in the best interest of beneficiaries of both the MasterFund and the Retirement Portfiolio.[12]

Two specific issues about the transaction arose.

The first related to grandfathered commissions. ANZ management had given the board a number of papers about the transaction that dealt with grandfathered commissions. One noted a working assumption that commissions would continue to be grandfathered, and that support from the advisor network is critical to the transaction.[13] Another referred to risks that could arise if grandfathered commissions were disturbed.[14]

Ms Weekes said that the management papers did not necessarily reflect the view of the board.[15] Both she and others on the board had queried those statements.[16] In particular, Ms Weekes did not accept that disturbing grandfathered commissions would have any negative effects on members.[17] The board had asked for legal advice and would consider the issue further.[18]

The board had not previously considered whether it was in the best interests of members to keep paying commissions.[19] However, the advice it asked for would cover grandfathered commissions both in the status quo and after the transaction.[20] Ms Weekes was clear that she and the OPC Board would make any decision about grandfathered commissions regardless of the wishes of the parent companywhether ANZ or IOOF.[21]

The second issue related to IOOF Holdings. Ms Weekes said that as part of deciding whether the transfer was in members’ best interests, the board needed to consider matters that pertain to IOOF.[22] Ms Weekes said that the board was not just concerned with the technical transaction or the systems and structures that would be in place after the transaction was complete.[23] The board was also concerned with IOOF’s view about the business and future.[24] To that end, the board had received media reports about IOOF and a legal report identifying some issues.[25]

In January 2018, the board had requested a meeting with IOOF to give comfort to the Board that members best interest obligations will be met going forward.[26] At the time of her evidence in August 2018, that meeting had not occurred. This was a deliberate decision. Ms Weekes said that considering the transfer was a complex process, and the board was focused on getting the information it needed.[27] Engaging with IOOF too early could confuse the very deliberate and careful considerations and the component parts of our decision.[28] Once the board was ready, it would consider engaging directly.[29]

Ultimately, Ms Weekes was clear that if the board was not satisfied that joining the IOOF group was in the best interests of members, it would not approve the SFT.[30]

Following APRA’s announcement of proceedings against IIML, Questor, and IOOF senior executives, ANZ announced that ‘Given the significance of APRA’s action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA.[31]


[1]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 6 [11].

[2]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 7 [18].

[3]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 7 [13].

[4]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 7 [18].

[5]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 7 [14].

[6]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 7 [19].

[7]Transcript, Victoria Weekes, 15 August 2018, 5027.

[8]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 8 [22].

[9]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 11 [36].

[10]Transcript, Victoria Weekes, 15 August 2018, 5027.

[11]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 20 [94].

[12]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 22 [106].

[13]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, Exhibit VW-2 [ANZ.801.042.0085].

[14]Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, Exhibit VW-2 [ANZ.801.042.0085].

[15] Exhibit 5.252, Board Meeting Papers Onepath Custodians, 26 February 2018.

[16] Transcript, Victoria Weekes, 15 August 2018, 5031.

[17] Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 20 [92].

[18] Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 20 [90].

[19] Transcript, Victoria Weekes, 15 August 2018, 5032.

[20] Transcript, Victoria Weekes, 15 August 2018, 5032.

[21] Transcript, Victoria Weekes, 15 August 2018, 5032.

[22] Transcript, Victoria Weekes, 15 August 2018, 5029.

[23] Transcript, Victoria Weekes, 15 August 2018, 5029; Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 15 [62(c)].

[24] Transcript, Victoria Weekes, 15 August 2018, 5029; Exhibit 5.251, Witness statement of Victoria Weekes, 14 August 2018, 15 [62(c)].

[25] Transcript, Victoria Weekes, 15 August 2018, 5035.

[26] Exhibit 5.253, 29 March 2018, Board Meeting Agenda OnePath Custodians, 16.

[27] Transcript, Victoria Weekes, 15 August 2018, 5033.

[28] Transcript, Victoria Weekes, 15 August 2018, 5033.

[29] Transcript, Victoria Weekes, 15 August 2018, 5033–4.

[30] Transcript, Victoria Weekes, 15 August 2018, 5034.

[31] ANZ, ‘Update on Sale of Wealth Businesses’ (Media Release, 7 December 2018).

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