‘Lying’ bank bosses may face penalties and prison

Scott Morrison ‘deeply disturbed’ about banking royal commission confessions.

‘Lying’ bank bosses may be jailed

In the strongest signal yet that bank executives could be forced to take responsibility for their unlawfulness, the Treasurer yesterday morning hinted that they could be imprisoned.

Scott Morrison told journalists that banking and financial services executives who lie to the corporate regulator could face penalties, including jail time.

The tough call follows two days of stunning admissions from AMP financial advice chief executive Jack Regan that the investment juggernaut had misled the Australian Securities and Investments Commission (ASIC) on at least 20 occasions.

Commonwealth Bank private wealth chief Marianne Perkovic also fronted the banking royal commission and acknowledged that Commbank had, like AMP, also been charging for financial advice that was never delivered to clients.

But unlike Ms Perkovic’s reluctant admission, Mr Regan readily agreed that AMP had been less than ethical.

The confessions were extracted by Michael Hodge QC, Senior Counsel assisting the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, during his interrogation over AMP’s 90-day fee policy.

Mr Regan revealed AMP was knowingly charging some clients for financial advice they were not receiving, in contravention of ASIC regulations.

The ABC reported yesterday that Mr Morrison was “deeply disturbed” by revelations emerging from the royal commission.

“They have said that they basically charged people for services they didn't provide and they have admitted to statements that were misleading to ASIC and to their own customers, and this is deeply distressing,” Mr Morrison said.

“This type of behaviour can attract penalties which include jail time. That's how serious these things are.

“I am very reassured by the fact that these matters were already being pursued by ASIC and will continue to be pursued by ASIC.”

The corporate watchdog followed the Treasurer’s remarks with a statement that it had been investigating AMP, but would not comment at this stage.

Yesterday morning, it was another AMP executive, John Keating, who felt Senior Counsel Hodge’s blowtorch, this time over wealth management platforms that appeared to put clients into a holding pattern.

“You knew that they were being charged a price uncompetitive with the market, but decided not to adjust your price?’’ the barrister asked, to which Mr Keating replied: “That’s correct.”

According to ABC reporting, AMP’s Platform Development Head then explained that the company was “focused on its newer products, but it appeared to have made no/little attempt to move existing customers from the more expensive legacy products to better value newer ones”.

Tweeting on the legacy products, Fairfax reporter Sarah Danckert wrote: “AMP's wealth management platforms sound like the Hotel California. You can check in, but you can never leave (without paying a massive capital gains tax bill).”

The other major banks will front the royal commission in coming days.

Opinion: Should bank boards get away with disrespecting your super?

The damage to AMP’s brand during the banking inquiry grilling this week has naturally translated into a shredding of the stock’s value.

News service Reuters’ graph illustrates and compares how the stock prices of the Big Four banks and AMP have fallen since the royal commission was announced … and it ain’t pretty.

AMP shares have lost $3 billion in value since early March. Put another way, the $1 slide to yesterday’s closing price of $4.45 is equal to $500 million in losses a week over the past month and a half.

Being one of Australia’s biggest financial services companies, you can bet your bottom dollar many if not most superannuation funds, including yours, will own a slab of AMP. While the share rout will not bankrupt super funds, your savings will likely take a hit.

With all the brouhaha around how the Big Four and AMP have ripped millions of dollars off customers for fake advice, there hasn’t been anywhere near as much of a murmur about how those saving for retirement have also been burnt.

Maybe it is time for those sitting in Mahogany Row – the chairpersons and directors on the boards – to answer questions. While it is all very satisfying to watch bank executives being grilled, at the end of the day they are employed to make money and enrich shareholders.

And even if they do get chastised by the corporate watchdog and others, most will already have exit strategies. Certainly there are many chief executives who had already given some thought to not having to walk around for too long with egg on their faces; AMP head Craig Meller leaves at the end of 2018 and CommBank’s Ian Narev is handing over to a new boss this month, joining the slew of that bank’s executives who have walked. Across at ANZ, deputy chief executive Graham Hodges and chief risk officer Nigel Williams are also leaving this year. There is no suggestion that these men will be accused of wrong-doing, but no doubt they won’t be the only ones heading for the exit door after the royal commission concludes.

Less common is for a whole board to roll over. But should that be the case? Perhaps the directors should be more accountable for the misconduct. After all, the boards are supposed to be the companies’ ‘culture police’, ensuring those they preside over stay honest and true to rules laid down by the Australian Securities and Investments Commission.

Independent and respected economist Saul Eslake certainly agrees that Commissioner Kenneth Hayne could force bank directors to face his questions.

Mr Eslake told YourLifeChoices: “Ultimately, it is the board that takes responsibility."

Year in year out, board chairmen write glowing reports of the achievements of their bank chief executives, congratulating them for returning bumper after bumper billion-dollar profits. In light of the royal commission revelations so far, perhaps the powers that be ought to be asking boards and their chairs to ‘please explain’ any link between these profits and the misconduct that they had overlooked.

Do you think bank executives should be jailed if they are found to have flouted the regulations? Have you been charged for financial advice you did not receive?

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    COMMENTS

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    19th Apr 2018
    10:39am
    Yes, people who lie to regulators should face gaol time and fines. I know that those at the top are ultimately responsible for a company but I question whether they should be the ones to suffer sanctions. If they are lied to and there is a cover-up at a level below them and they have made efforts to confirm the erroneous reports, can we really lay full blame at their feet?
    Theo1943
    19th Apr 2018
    4:29pm
    Blame the footsoldiers, not the commanders?
    johnnydownunder
    19th Apr 2018
    8:25pm
    Absolutely, time to wake and smell the dissolution.
    MICK
    20th Apr 2018
    6:27am
    The buck should stop at the top OM. If a bank CEO has no idea then fair enough but the past 20 years has been DELIBERATE attempts to defraud individuals who are not cashed up enough to take a bank to court. That locks in an instant loss and financial loss for the victim and that is how the crooked system protected by our government works. Better known as a cartel of crooks watching each others' backs.
    Do not give them golden parachutes and top jobs in other industries. Send the bastards to jail where common criminals belong. No parole!
    TREBOR
    20th Apr 2018
    9:28am
    Even under their new shift to 'outliers' instead of 'in-house' - I would not let these vultures at the top of the pile in these institutions get away with less responsibility that a principal franchisor has now been deemed to hold - if they stuff up - the franchisor has failed in a duty.

    so if the banks 'outliers' similarly fail in their duties - the bank must retain ultimate responsibility.
    TREBOR
    20th Apr 2018
    9:29am
    If a bank CEO has no idea then he/she has failed in his/her first duty.
    Sen.Cit.90
    19th Apr 2018
    10:43am
    These disclosures are the results of a Royal Commission that we did not need Mmmmmm
    MICK
    20th Apr 2018
    6:28am
    You mean one the banking/government cartel did not want and tried everything to stop?
    Strummer
    20th Apr 2018
    6:56am
    Yes, that's the one.
    Adrianus
    20th Apr 2018
    8:08am
    Yep, I'm one of those who thought it was not needed. Just didn't realise that all this was going on. :(
    Seadove
    20th Apr 2018
    10:12am
    Quite strange don't you think that the government did not want this banking royal commission and it was the banks themselves that ended up asking for it? Did they realise that things were so corrupt and unsolvable that something was needed to bring it all to an end? Heads should roll and a lot of them IMO and yes gaol time most definitely.
    Misty
    24th Apr 2018
    12:22pm
    Seeing as Malcolm Turnbull was once a banker, and strongly came out against a RC into banking makes you wonder about how much he knew, and how much damage the findings would to to him and the Coalition deniers.
    fearlessfly
    19th Apr 2018
    10:59am
    Absolutely jail them ! Every single one of those a'holes who lied to ASIC SHOULD be jailed! Might give the other rats working in the corrupt financial industry food for thought about their own actions.
    GeorgeM
    19th Apr 2018
    7:46pm
    ASIC must have known about these practices for a long time - the question is WHY DID THEY NOT ACT?

    If they didn't, they haven't been doing their job, seeing how quickly the Royal Commission had brought up so many issues with atrocious behaviour and missing governance. Fire ASIC people responsible as well, besides sending perpetrators of these acts within the banks to jail!
    MICK
    20th Apr 2018
    6:30am
    ASIC is a toothless tiger which has one prosecution a year to look good. Try to get them to do something about a crooked scam and see what happens. They avoid it and give you BS about who should do something other than them. Pitiful bureaucracy at work.
    cupoftea
    19th Apr 2018
    11:22am
    OM you sound just like a prime minister I see on tv,They will be able to pay there fines 0n the 65 billion dollar gift that this government is giving the top end of town
    Retired Knowall
    19th Apr 2018
    4:28pm
    The question is "Do you think they should be jailed", NOT Fined.
    Absolutely, it has been FRAUD, premeditated and executed by the executives.
    MICK
    20th Apr 2018
    6:31am
    The real question is why should shoplifters be hit harder than corporate criminals who are protected?
    bordermum
    19th Apr 2018
    11:27am
    ASIC does not have a great record of successfully prosecuting large corporations, or their executives.
    Any penalties, if indeed any of these people are ever held accountable, are likely to be minimal.

    Really their salaries,assets and termination payments should be frozen and used to repay all those people they have happily defrauded.
    MICK
    20th Apr 2018
    6:33am
    ASIC does not want to prosecute, its employees do not want to rock the boat lest they lose their well paid jobs and corporate criminals are mostly protected by the political elite. That is fraud at the top by any other name.
    don
    19th Apr 2018
    12:18pm
    I think the biggest offenders are the politicians, imagine if they were Investigated , how many would still be there .? Imagine the savings , just a few Bishop , Ley plus labor etc. They should be forced to retire the same as all of us their perks curtailed.
    Anonymous
    19th Apr 2018
    1:35pm
    And those who lie to the public to get elected should be jailed for fraud.
    GeorgeM
    19th Apr 2018
    7:52pm
    Even those who were elected after making false declarations about their citizenship didn't suffer ANY consequences. I heard it has been decided (not sure by whom - maybe themselves / their mates) that they don't have to refund the falsely earned salaries & perks!
    With taxpayers also paying for their legal expenses and re-election costs - talk about insulting the taxpayer!

    19th Apr 2018
    12:31pm
    I would rather politicians that lie to the people face jail time
    Retired Knowall
    19th Apr 2018
    4:31pm
    Why single out Politicians, this is not a case of Either/Or, if you commit FRAUD no matter who you are, you should face the same consequences as anybody else.
    ex PS
    23rd Apr 2018
    10:59am
    That would be just about every politician we have. If their lips are moving, they are probably lying.
    floss
    19th Apr 2018
    12:38pm
    The big end of town go to jail WHAT A JOKE,the Libs put their mates in jail I would like to see that.Mal was dead set against any Royal Commission at all.Back to bed O.M.
    HarrysOpinion
    19th Apr 2018
    1:56pm
    Lying, in general, is not against the law except when faced with Royal Commission. However, a jail sentence is more just if the Commission can prove that financial gain was made through deceptive, misleading and negligent conduct. Charging customers fees when no service was provided fits the category of financial gain by deception. Someone in government should be printing up "GoTo Jail" cards and handing them to the banking executives.
    Old Geezer
    19th Apr 2018
    1:57pm
    They will just tell the Royal Commission what it wants to know and that will be the end of it.
    Tib
    19th Apr 2018
    2:37pm
    I can hear the bank executives being chastised now. You naughty naughty bank executive ..go to retirement collect 20 million. Watch them ,nothing will happen, I can hear them laughing from here,
    Tib
    19th Apr 2018
    2:40pm
    I'm sure my super fund has invested in AMP but I personally wouldn't touch them they have always been dodgy. I don't like NAB either.
    Anonymous
    22nd Apr 2018
    6:21pm
    All super funds have money in the big banks...so be prepared superannuants for a dip in profits which will hit your hip pockets.
    MD
    19th Apr 2018
    2:57pm
    As recorded live - verbatum the Treasurer and reported correctly herein; (executives) "could face penalties, including jail time." Was this just another show of chest thumping from one of our prize exhibits in the zoos' primate enclosure - specifically gorilla section ?

    "Could" - the key word in this predicative statement by our fearless treasurer seems to lack something we would expect from a fully developed silverback - at least one with a comprehensive mating kit.

    What a load of bollocks !
    BJ
    19th Apr 2018
    3:08pm
    All my super is with AMP am i in danger of loosing all or part of it should i pull it out and transfer it another company
    Anonymous
    19th Apr 2018
    4:19pm
    NO BJ just ride it out if you have super with them and you have AMP shares they have gone down 12 % this week but they will recover this is just a small blip and all will be forgotten in a week or two believe me.Transfer to another company will cost you money and they may be just as bad.
    Travellersjoy
    19th Apr 2018
    4:23pm
    Single mum using drugs goes to jail - banksters lying cheating and stealing get the wet lettuce treatment.

    Equality before the law?

    I'ld like to see that!
    AutumnOz
    19th Apr 2018
    4:52pm
    Oh yes, that would be a nice feeling.........equality before the law.... unfortunately it probably wont happen in my lifetime.
    Still something to look forward to just in case the almost impossible happens.
    AutumnOz
    19th Apr 2018
    4:46pm
    The banks, the financial services and the insurance companies have all been ripping off the Australian people ever since they were all deregulated.
    Those to blame for the current mess are the previous and politicians who found it "too hard" to find a Minister to keep an eye on the outrageous behaviour of the banks etc. and have allowed our country to go downhill.
    Many, many people are losing income because of the lack of interest paid on term deposits and the mismanagement of the super funds which allow such high fees to be removed for "advice" which may, or may not, have been given.
    By refusing to keep checking on the banks etc. the government in power of either major party, in whichever of the previous years, are to blame for all the ills suffered by those who rely on the banks etc. for an income in their retirement or unemployment.
    AutumnOz
    19th Apr 2018
    4:50pm
    By the way.
    A prison is known as a gaol in the UK and Australia, it is spelled jail in the USA which looks very odd.
    Is it possible to have an English spell checker instead of an American one which keeps wanting us to correct English spelling?

    19th Apr 2018
    5:20pm
    Jail - about time. Now we need a Royal Commission into telcos.
    Kato
    19th Apr 2018
    6:00pm
    I wish he would apply that to Politicians who continually lie to Royal Commissions and look down the camera so smugly knowing they are deceiving the Taxpayers of Australia.
    GrayComputing
    19th Apr 2018
    8:53pm
    I lost over 1/2 my super in the GFC and the b* at MLC still charged me another $5000 for loosing my money.
    The whole superannuation system is rotten to the core with no protection, no care, go away and die poor is the commercial super funds attitudes.
    Send the guilty to jail and also take away their own super loaded up super funds
    Adrianus
    20th Apr 2018
    8:12am
    I think when people stand at the door of the bank now they will be thinking , this could be heaven or this could be hell.
    Anonymous
    20th Apr 2018
    11:58pm
    Hotel California ?
    Adrianus
    21st Apr 2018
    1:46pm
    Maybe? But I've never seen any mirrors on the ceiling or pink champagne on ice? I just get the basics. :(
    Suze
    20th Apr 2018
    10:01am
    Re: Should bank boards get away with disrespecting your super?
    It is the Politicians and bureaucrats that should face jail tie and fines for continuously change the goal post of the superannuation.
    Adrianus
    23rd Apr 2018
    7:20am
    NO!! Disrespect my super and you disrespect me. The continual moving of the goal posts has produced a robust industry and made super so complex that it has had a negative outcome for the people it was supposed to help. Its taken me a very long time to form this opinion so its not a view I will change overnight, but I think over the last 50 years we have continually shown faith in people who are not up to the job. While they're singing Hotel California, I'm singing 'I need a hero' https://youtu.be/OBwS66EBUcY
    alfie
    20th Apr 2018
    10:40am
    Yes, we paid for financial services for years that we didn’t get and therefore cancelled it.

    Yes too to jail them for fraud for 5 years minimum. They are playing with people’s livelihood and future.... simply Greed!!!
    Ken
    22nd Apr 2018
    11:23pm
    Settle down people, we all know that not one of these people will go to jail. Probably a few fines will be imposed here and there and the banks will increase fees and recover that money in one week.
    Adrianus
    23rd Apr 2018
    4:04pm
    Don't tell me to settle down! Who gave AMP a banking licence and what the hell does ""Amicus certus in re incerta" mean?!!!
    Misty
    24th Apr 2018
    12:17pm
    ASIC has shown itself to be a toothless tiger, it also has questions to answer.
    Misty
    24th Apr 2018
    12:17pm
    ASIC has shown itself to be a toothless tiger, it also has questions to answer.