Major banks to be quizzed over ‘failed’ advice

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The Big Four banks and AMP will deliver up some of their most senior executives for merciless grilling by Justice Kenneth Hayne when round two of the banking inquiry gets under way on Monday.

The second round will zero in on the dodgy financial planning practices as called out by the corporate watchdog in October 2016 when it reported “systemic failures of the advice divisions of the largest banks and AMP”.

The first round of hearings, which finished last month, related to consumer lending practices.

Last December, the Australian Securities and Investments Commission (ASIC) said that as a result of its punitive actions over the ‘fees for no service’ scandal, the four institutions had paid out more than $216 million in compensation to almost 300,000 customers.

The Commonwealth Bank bore the lion’s share of the fines, having to cough up almost $120 million. The practices of bank operatives working for the Count Financial Planning arm were implicated, as well as those of direct employees of CommBank.

Also caught in ASIC’s net at the time were AMP divisions Charter Financial Planning and Hillross Financial Services.

Between 16 April and 27 April, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will also focus on four other ASIC case studies:

  • investment platform fees
  • inappropriate financial advice
  • improper conduct by financial advisers
  • the disciplinary regime for the financial advice profession.

The commission will reference ASIC revelations that ANZ and its subsidiaries, RI Advice Group and Millennium 3 Financial Services, sold financial planning advice that was not in the best interests of their customers.

The latest hearings will also consider the treatment of consumers, compliance with the law, community expectations, and the adequacy of the current legal and regulatory system. Bank customers will be giving evidence of their experiences with financial planning advice.

In a sign that even the royal commission can sometimes slip up too, late last week media director Jamie Collins revealed that 13 confidential documents relating to the hearings had been accidentally provided to the media.

“Please note that documents listed below were inadvertently made available on the Media Workspace for a short period of time last week. Each of these documents are subject to a non-publication direction and no information contained in those documents should be published,” Mr Collins said in a release.

The commission has received 3254 submissions and just seven per cent of them have dealt with financial advice. Nearly 70 per cent of the submissions deal with banking issues and nine per cent concern superannuation.

The public hearings beginning next week will be at the Commonwealth Law Courts Building in Melbourne.

Have you attended any of the public hearings into the financial services sector and, if so, what did you think of them? Have you been a victim of misconduct practices by a financial planner? Did you receive compensation? 

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Written by Olga Galacho

11 Comments

Total Comments: 11
  1. 0
    0

    I left banks decades ago because of their fee structures and I wasn’t prepared to pay through the nose for services that I could get for free at a Building Society. I find it passing curious that the banks are suddenly investigating fees and interest and making adjustments with much fanfare although I’m sure that the Royal Commission plays no part in this. (tongue firmly planted in cheek)

    As the Royal Commission moves on, I’m certain that a lot of unsavoury practices will be brought to light especially amongst the superannuation funds which have had some of their spending and administration matters highlighted in recent press articles and TV coverage. It’s easy to manipulate millions when dealing with billions as long as those manipulating only disclose percentages, not actual cash.

    • 0
      0

      After having to take a Building Society to court I am staying with banks.

    • 0
      0

      Query banks all you like. The acid test will be if they get huge fines or not. They won’t and highly likely they will be regulated from repeating their bad behaviour.
      As I have suggested before this is a show and once it passes it will be business as usual. Expect no more from Turnbull Inc.

    • 0
      0

      Who actually owns Building Societies? If you unravel the ownership they are actually all owned by big banks. They are usually set up with a regional bank and that regional bank is owned by the big banks.

  2. 0
    0

    Banks provide excellent services to deposit income and make bill payments through everyday banking accounts and credit cards.
    Also for loans to buy property and revolving credit for investment purposes

    Not a place I would be taking investment advice from

  3. 0
    0

    I am with CBA Colonial First State for my superannuation. Not making any money, but paying $10,000 in hidden fees for management of funds. Paying my financial adviser almost $4000 a year. I can’t do it myself, I am not happy but don’t know what to do. Anybody who can help would be appreciated. Thanks.

    • 0
      0

      The good news is I am NOT a Financial Planner / Adviser, so I accept no liability for any advice, nor do I ask for Fees – Ha!

      You could start with a couple of steps immediately, and then carry out further steps in a careful measured way. IMMEDIATE steps:
      a. Roll over your entire Super to an Industry Fund, say into their (normally safe and good performing) Balanced Option – if you can’t decide which Fund, go for the biggest (and safest) Australian Super.
      b. Sack your Financial Adviser right now!

      If you are considering applying for Age Pension, also fix an appointment (free) to see a Centrelink Financial Information Officer – they can give some terrific initial tips in 0.5hr!

      Then, see if you need Financial advice – note that Australian Super and other such Industry Funds also have good advisers who will give advice and implementation support for once-off reasonable fees – nothing like what you are paying – and put your money in the most suitable Super mix after they assess you. Good Luck.

    • 0
      0

      If you don’t know how ti do Roll over, ask the recipient Super Fund – they will help you very willingly. All steps I gave are quite easy actually.


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