Critical Review: ANZ Car Loan and Royal Banking Commission Report

This report provides a critical review of the ANZ car loan issues brought to light by the Royal Banking Commission. It examines the misconduct related to flex commissions, poor income verification, and the involvement of third-party sellers, highlighting how these issues created a conflict of interest and led to loans being issued to individuals who were not financially capable of repayment. The report utilizes Coleman's Boat Model to illustrate the macro and micro levels of the problems. The report recommends improvements to the ANZ marketing team, including the use of Coleman's boat to identify and address problems, and the implementation of better income verification methods to prevent future misconduct. The report concludes that the issues within ANZ had a setback in the company's working, and the Coleman Problem can solve the wicked problem of Flex commission.

Running head: ANZ CAR LOAN IN ROYAL BANKING COMMISSION
ANZ CAR LOAN IN ROYAL BANKING COMMISSION
Name of the Student
Name of the University
Author note

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ANZ CAR LOAN IN ROYAL BANKING COMMISSION
Introduction
Royal Banking Commission is a public inquiry that is governed by an act of the
parliament. The commission was set up after there were serious misconducts that were taking
place in the banking and financial services industry. The main objective of the commission
was to identify the drawbacks that were prevalent in the industry and to protect the rights of
the consumers (Matthews 2016). In this report, the ANZ Car Loans in regards to the Royal
Banking Commission will be discussed and how they can be improved.
Discussion
ANZ Role in Royal Banking Commission
There was a multitude of problems that were heaped onto consumers under the
Esanda Dealers Finance Portfolio offered by ANZ as car loans. The first instance of
misconduct that came to light was that loans were given to undeserving, financially weak;
individuals on the guarantee of other financially stable entities who offered to be guarantors
without any formal agreement between ANZ and these alleged guarantors (Liem 2016). The
third party sellers for the ANZ car loans agreed to this unusual guarantor-loanee situation
because they were merely worried and concerned about their own commissions.
Second, the third party sellers were given the freedom and choice to decide on their
commissions depending on the customer (Mendelson 2018). This essentially meant that there
was a conflict of interest between these third party vendors advising the customers on their
best loan options and these same vendors trying to sell bigger loan amounts to earn higher
commissions.

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ANZ CAR LOAN IN ROYAL BANKING COMMISSION
The final part of the problem was a result of ANZ failing to establish a formal and
structured method of verifying an applicant’s financial health, income and expenditure. ANZ
admitted that at least 12 applicant’s payslips were not thoroughly checked and inspected,
before their loans were approved. This led to people with shoddy finances getting loans they
were in no condition to repay.
Wicked Problem
Wicked Problem for this particular case can be found within the Flex Commissions
that were offered to the third party vendors. The idea behind these commissions was to
motivate these sellers to on-board consumers from high-income backgrounds, thereby
increasing their commissions. ANZ did not foresee that this motivation would lead to sellers
trying to sell higher loan amounts to people with disproportionate incomes. The other wicked
problem that came forward was that the loans that were issued were issued to individuals who
had week financial structure, on the guarantee of someone else whose name was not
mentioned in the agreement. This was done by the third party vendors to sell more loans in
order to increase their commissions from the customers.
Coleman Boat Theory
To understand the wicked problem in a much more simplistic manner, one can
represent it by using the Coleman’s Boat Model. The Coleman’s boat is diagram that has two
parts. The upper part of the diagram defines the Macro level. These are the organisations,
institutions, policy and management. The lower part of the boat is the Micro level that is the
individuals or groups. These groups or individuals are affected by the macro factors (Ochiai
2015). It can be used to understand the relationship between the social structure and the
organisations that are operating.

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ANZ Car loans Victimizing Customers
Loan repositions
Flex Commissions
Incentives for Sellers
Conflict of Interest
Poor document verification
ANZ CAR LOAN IN ROYAL BANKING COMMISSION
Figure 1: The Coleman Boat Micro and Macro level
Figure 2: The Coleman Boat Model for ANZ Car Loans
Recommendation
Coleman’s boat is a kind of map that can be used to identify a problem. It is crucial
for marketing specialists to try and identify any issues that may cause dissatisfaction among
customers. Marketing experts not only use Coleman’s boat to identify a problem but to look
for any solutions to an existing wicked problem. I would recommend ANZ marketing team to
use Coleman’s boat to pinpoint the problem and try to implement counter measures to solve

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ANZ CAR LOAN IN ROYAL BANKING COMMISSION
the problem of non-financial experts advising strangers for car loan applications and forging
documents for the benefit third party vendors. In an honest opinion the problem lies in the
flex commission and poor income verification methods employed by ANZ when a new
customer is signed up for car loans, which creates an environment of greed and competition
between the sellers who started thinking that the higher the loan amount they disburse to
customers the more commission they get. This is one way of interpreting a problem within an
institution. ANZ could have employed Coleman’s boat to foresee the outcome of a plan.
However, Coleman’s boat can still be applied to detect or predict other problems that may
arise due to certain ANZ policies. That will help ANZ to improve their customer service,
performance and organisational behaviour while also earning the trust of its customers. The
Coleman boat theory can help ANZ understand the macro factors and how they are related to
the micro factors. The company can also understand how an individual or a group can affect
the macro level and how they are interlinked by applying the Coleman’s boat theory.
Conclusion
From the above discussion, it can be concluded that ANZ had many problems, which
had a setback in the company’s working. The customers were not satisfied and faced
numerous problems. The company could solve the wicked problem of Flex commission using
the Coleman Problem.

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ANZ CAR LOAN IN ROYAL BANKING COMMISSION
References
Matthews, A., 2016. The financial services industry: Whistleblowing and calls for a royal
commission. Precedent (Sydney, NSW), (136), p.35.
Liem, M.C., 2016. Corporate Governance in Banking Industry: An Explanatory
Study. Corporate Governance, 7(6).
Mendelson, S. G., 2018 Transcript. Witness statement of Guy Samuel Mendelson; Exhibit
1.149
Ochiai, H., 2015. The Coleman Boat and the Macro-Micro Link.