Banking inquiry will probe systematic failures in financial advice divisions.
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?