A representative of Australia’s biggest banks has claimed that they ‘don’t see the urgency’ in establishing a last-resort compensation scheme for victims of poor advice.
Speaking at the Senate hearing into the scrutiny of financial advice, the chief executive of the Australian Banking Association (ABA) Steven Munchenberg said there were ‘other ways’ of improving trust in Australia’s financial services system. It was suggested that the bank members of the ABA were concerned about those who have received poor advice in the past making claims from such a scheme.
At the same hearing, Shane Tregillis of the Financial Ombudsman Service stated that 188 people are currently owed a total of $12.6 million from 33 different financial institutions. Clients of the Commonwealth Bank, the National Australia Bank and Macquarie Bank are dependent upon internal compensation schemes to rule whether they will receive restitution for money lost due to poor financial advice by planners from these banks. The Ombudsman estimates the cost to government to set up a ‘last-resort’ compensation scheme would be $800,000.
Learn about the Enquiry here.
Read more at Sydney Morning Herald.
When Dracula is in charge of the blood bank, it’s highly unlikely he will share anything with you or me. And that, sadly, is the case with our banks.
Yes, it’s true customer losses due to poor advice – or in some cases white-collar crime – run into the millions. In fact the estimate of $12.6 million is probably light-on, as this does not factor in the opportunity cost of that money, had it been invested at a reasonable rate of return, over the years. So we know nearly two hundred people are awaiting compensation that seems unlikely to come their way as the offending institution either refuses to pay or it’s gone broke in the meantime. Add to this the ‘hopefuls’ who are lining up for the internal enquires at the big banks – enquires which are excruciatingly slow and, to date, have paid compensation to only a handful of their clients who were the victims of their dodgy planners.
What is wrong here? It’s simple – Dracula should NEVER be in charge of any bank. We urgently need an independent last resort scheme for those whose life savings have suffered at the hands of the incompetent, the greedy and the downright dishonest planners who seem to find a home in some of our major banks. It’s all very well for the ABA to say they don’t ‘see the urgency’ and that there are other ways to ‘build trust and confidence’. They are wrong.
First and foremost we need a Royal Commission into our financial services industry. The pot of money sitting in super has now reached $2 trillion. This is larger than our GDP – it is too significant to allow those who stand to profit the most to also police the system when it has clearly broken down. It’s your money and mine, so it’s up to us to put pressure on banks that have been shown to treat customers with contempt – or take a walk to another institution, perhaps a credit union with a better record?
What about you? Do you believe we need a ‘last-resort’ compensation scheme? Have you lost money due to poor financial advice? How would you clean up this industry?