Is it any wonder that consumers are reluctant to seek financial advice, when safeguards are being weakened?
The implication of Commonwealth Bank staff in a $100 million fraud was allegedly ignored by the banking giant, which instead decided to chase the victims for the return of the funds.
Bill Jordanou and Robert Zaia of Victorian accounting firm, Zaia Arthur & Associates and three associates were charged last month with numerous counts of fraud and financial deception. All the accused ran an alleged decade-long scam, falsifing loan documents and is believed to amount to over $100 million. The money from the fraudulent loan applications was used to fund the lavish lifestyles of those involved and to keep up repayments on the original fraudulent loans.
The Victorian fraud squad commenced an investigation in 2011, after the CBA discovered that loans issued were supported by false documentation. However, it is believed that the actual fraud pre-dates 2007, when CBA customers Debbie Mann and Jim Barker were facing foreclosure on their property over a loan organised by Bill Jordanou and Robert Zaia. The couple advised CBA that the income documents had been doctored with the knowledge of a senior CBA loan manager and they also questioned unauthorised withdrawals totalling $26,000 from Ms Mann’s account. The CBA settled the matter out of court with the couple.
It has also been revealed that the bank tried to foreclose on the home of a 91-year-old woman, who was also caught up in the fraudulent scheme, but the bank’s action was abandoned when the woman’s family agreed to sign a non-disclosure agreement.
Several other victims have faced different, inappropriate responses from the CBA. These actions and the alleged involvement of a CBA staff member in the fraud have left victims angry.
CBA refused to comment to Fairfax Media, with a spokeswoman for the bank saying, “In regard to your questions relating to events in 2007, you would appreciate that there are currently fraud allegations regarding Zaia Arthur & Associates before the court and as such it is not appropriate for us to comment,” she said.
Read more at TheAge.com.au
Is it any wonder that Australians are reluctant to seek financial advice, be it for home loans or long term planning, when consumer safeguards are being weakened?
The Future of Financial Advice (FoFA) reforms where introduced in 2012 by the then Labor Government to make it easier and safer for everyday Australians to seek and receive independent, qualified advice to help them plan for their future financial needs. Yet we have seen the Coalition Government make it one of its first goals to roll back the reforms and remove any security for those seeking advice.
In a response which seems to have been undertaken to placate angry stakeholders, Senator Mathias Cormann – the Finance Minister and Acting Assistant Treasurer, put the rollback of the reforms on hold to consult the relevant parties. However, the resulting recommended legislation appears to be intended to appease those organisations and companies which are set to benefit financially from the watered-down reforms – and it’s not your average Joe on the street.
On Friday, Senator Cormann announced that the Government will push ahead with the roll back of the reforms, effectively removing much of the security for those actually seeking the financial advice, those who can least afford to cover failed investments. And why? Because the reforms would be too expensive and entail too much for the financial giants, such as AMP and the big four banks, who provide 80 per cent of such advice, to implement.
So now when Joe and Mary go to their bank to withdraw some money to pay bills, they will be bombarded with offers of loans, credit cards and even superannuation products by the kid behind the counter who is barely out of school and who has very little training or experience in such products. And with banks, their staff and agents being frequently investigated for fraudulent behaviour, as highlighted in the current Victorian fraud squad investigation into fraudulent loans allegedly signed off by the CBA, how can anyone trust that the information and advice given is correct?
Under the Labor Government’s reforms, financial planners would be required to act in the best interests of their clients. Now it seems they only have to act in the best interests of their employers and their own hip pockets. Having legislation in place to remove the uncertainty that a planner may not be acting in the consumers best interests would have been priceless for the many Australians who desperately need to take control of their financial future. But apparently this would be too high a price to bear for the big four banks, AMP and the Government.
Does the roll back of FoFA legislation mean you are less likely to seek financial advice? Will it encourage you to deal with truly independent advisors? Or does it make little difference to the trust you have in planners?
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