Bank identified offenders but handed out only a warning. That's all about to change.
The banking royal commission has claimed its first high-profile scalp with AMP chief executive Craig Meller announcing this morning he would step down immediately.
The shock resignation follows a raft of admissions to the commission by the financial services giant involving financial scandals, including lying to the regulators.
All eyes are now on the Commonwealth Bank (CommBank), which earlier confessed to the commission that it charged dead people for services it did not deliver.
Soon after that revelation, the Federal Government announced it would jack up fines to potentially $200 million for financial misconduct.
The queue of politicians and media spokespeople who criticised the decision to hold the inquiry continues to shrink. Even former deputy prime minister Barnaby Joyce now says his initial opposition was “naïve” and told Fairfax Media: “They [the banks] should consider whether they should be in the financial planning business after the evidence delivered. It appears from evidence to be too much of a conflict of interest and a temptation for them.”
The Government’s backflip includes offering Commissioner Kenneth Hayne more time to conduct his inquiry into misconduct in the banking, financial services and superannuation sectors and giving regulators the power to sack corporate executives.
Treasurer Scott Morrison and Financial Services Minister Kelly O'Dwyer will today announce new criminal penalties of up to 10 years' jail and maximum fines of $945,000 for individuals breaching the Corporations Act, and fines for corporations of $9.45 million or 10 per cent of annual turnover, whichever is largest, the Australian Financial Reviewreported.
Civil penalties will increase tenfold with maximum fines of either $1.05 million for individuals and $10.5 million for corporations, or three times the benefit gained or loss avoided, or 10 per cent annual turnover, again, whichever is largest. The fine will be capped at $210 million, the report said.
Meanwhile, on day four of the inquiry’s focus on financial planning advice delivered by the Big Four banks and AMP, it was revealed that CommBank advisers charged clients fees for years after they had died.
Explaining why the advisers escaped with just a warning from the bank and were not reported to the Australian Securities and Investments Commission (ASIC), Marianne Perkovic, CommBank head of private banking, said the organisation was still deciding whether the offences were serious enough to warrant reporting to the watchdog.
An internal CommBank report from 2015 presented on Wednesday showed that a client of the bank’s Count financial planning arm was charged fees from 2003 to at least 2015, despite the planner knowing she had passed away in 2004.
Earlier, AMP Financial Advice Chief Executive Jack Regan admitted to the commission that the investment juggernaut had misled ASIC on at least 20 occasions.
He revealed that AMP was knowingly charging some clients for financial advice they were not receiving, in contravention of ASIC regulations.
Have you been charged for financial advice that was not delivered? Do you think the Government’s planned penalties are enough?