ASIC report reveals dodgy dealings in finance sector

ASIC releases shocking report about dodgy dealings in the financial sector.

ASIC report reveals dodgy dealings in finance sector

Amid calls for increased scrutiny of the finance sector, the Australian Securities and Investments Commission (ASIC) has released a shocking report revealing that 200,000 Australians may have paid for financial advice they never received.

The Financial advice: Fees for no service report discloses more damning evidence that banking and financial institutions such as AMP, ANZ, CBA, NAB and Westpac need to be cleaned up.

ASIC’s report reveals that around $23 million in refunds has been paid to 27,000 big bank and AMP customers for ‘sham’ financial advice, with a further 175,000 people who could still receive around $154 million in compensation as the review into the sector continues.

The watchdog’s investigation covers customers who actually have financial advisers and pay fees for advice they do not receive and customers who don’t even have financial advisers but are charged fees for advice anyway.

All told, around $178 million in compensation may be doled out to 203,000 hoodwinked customers.

The report certainly strengthens the stance long-held by not-for-profit organisations that have petitioned to prevent sales commissions in an effort to protect consumers.

“The ASIC findings are another shocking insight into the governance of Australia’s major banks. It is instructive that the banks vigorously lobbied against laws that prohibited this type of misconduct,” said Industry Super Australia Chief Executive David Whiteley. “Australia’s banks are engaged in cross-selling, charging for financial advice that they don’t provide and dragging their heels on moving default super into low cost accounts.

“This pattern of behaviour goes to their governance and casts doubt on the compatibility of the banks and compulsory super.”

With Labor’s calls for a royal commission into the banking and finance sector seemingly going unheeded, the Government’s announcement last week that it will install a new ‘watchdog’ to govern the sector could be a step in the right direction. But unless harsh penalties are handed out to big banks and financial institutions that engage in unscrupulous practices such as those found in this report – it may not be enough to clean it up.

Are you one of the 200,000 Australians who has received dodgy financial advice? Have you received, or will you seek, compensation?

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    COMMENTS

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    floss
    28th Oct 2016
    10:45am
    The big end of town can any thing they like under this federal government.I have lost faith in them and hope the next mob will govern for ALL AUSTRALIANS.
    Old Geezer
    28th Oct 2016
    10:59am
    Learn the rules and play them at their own game. It is as simple as that.
    Anonymous
    28th Oct 2016
    12:22pm
    looney, are you saying that the banks were all squeaky clean between 2007 and 2013? No, I didn't think so.
    Old Geezer
    28th Oct 2016
    12:43pm
    I have had no trouble with any of the banks. If anything they have helped me get to where I am financially today. For that I applaud them

    I do however know many people who did things financially they should not have done and are now blaming the banks for their own foolishness.
    Tom Tank
    28th Oct 2016
    2:08pm
    It is surprising to read that people who placed their trust in Bank's employees are foolish.
    Those of us who are not as financially smart, or familiar with finance, as some contributors to this discussion, have to seek advice. This is with the expectation that the advice received is in the best interests of those seeking the advice. We simple minded people are trusting like that when it came to dealing with icons of Australia, like the banks.
    That trust has been betrayed and, in my book, that is every bit as evil as armed robbery. At least the robbers are honest in their intentions in that they are quite open that they are going to steal from you.
    It should not be forgotten that legislation was in place to curb some of the excesses of financial advisers but the LNP were to take out the clause that compelled those providing advice that it had to be in the customer's best interests.
    Personally I got independent advice that I paid for upfront and NOT from a financial instituion. That cost a bit at the time but I am pleased with the overall result over quite a few years now.
    Old Geezer
    28th Oct 2016
    6:43pm
    I trust nobody and check everything and my family jokes about no getting anything past the Old Geezer.
    Eddy
    29th Oct 2016
    12:45pm
    OG, again you are blaming the victims. Learn the rules you say, what rules and where are they written. I expect one of the rules is that advisers must act ethically in best interests of their clients. Obviously they don't. My background is engineering, I am, or was, competent in my field, but I cannot fully understand the financial statement sent to me by my Timeshare group let alone a complex document one gets from a financial institution. Any individual, organisation or cartel which allegedly stole $178M should be investigated by an equally powerful organisation, and a Royal Commission, with it's powers, is probably the best place to start. However the big banks seem to be immune to this level of scrutiny.
    MICK
    28th Oct 2016
    10:48am
    The problem is basic: ASIC, the ACCC and ICAC are not doing their jobs and ASIC appears to be at the top of this list.
    Whilst funding is a part of the problem the reality is that complaints are either shredded or officers send a fob off response rather than addressing issues. So the crims know they are safe and we get a growth industry. It does not surprise me that over 200,000 customers have been done over. The attitude is 'who cares' unless the media come after us.
    Anonymous
    28th Oct 2016
    12:12pm
    I agree MICK, from reports this morning, it seems that NAB coughed up when it discovered the rort and told ASIC. It begs the question, was NAB being investigated and put their hand up to avoid too much bad publicity. There is another fee which banks do nothing for; it is called an Overdraft Service Fee or a Debt Administration Fee or what ever the banks choose to name it. It is supposed to be paid to ensure that the rates and charges on an overdraft account are correct but no additional checks are ever made.

    If you check up on the history of fees and charges since deregulation you will notice a pattern. A new fee or charge is brought in by one of the "Big Four" which cops the flak from customers. When the brouhaha has died, the other banks quietly introduce the same fee with the excuse that all the others do it too. It appears that each bank takes a turn at bringing in a nasty new unwarranted fee although proving that is difficult. I don't know how banks escape a charge of collusion.
    Old Geezer
    28th Oct 2016
    12:19pm
    If you overdraw your account you deserve to be charged a hefty fee. It is bad money management on your part not the banks.

    Best idea is to advise the bank that you don't want your account to be overdrawn under any circumstances. This helps stop fraudulent transactions too.
    Anonymous
    28th Oct 2016
    12:28pm
    What are you talking about Old Geezer? I was not referring to a casual overdrawing but an authorised overdraft which has already attracted application and establishment fees as well as an interest rate which used to include maintenance of the overdraft account. Can you not understand the difference between an overdraft account and a cheque account which becomes overdrawn?
    Old Geezer
    28th Oct 2016
    12:35pm
    All banks accounts are allowed to be withdrawn now unless you tell the bank otherwise. These attract fees.

    I have lines of credit (overdrafts) which can withdrawn any time without any fees. If you have them set up then you should not be paying any fees.

    That's why I am confused.
    Old Geezer
    28th Oct 2016
    10:58am
    I have my own personal banker with a couple of the major banks so it would not surprise me that they book a service every time I contact them. I don't use them for financial advice but for more technical aspects of banking and for better deals.
    Tom Tank
    28th Oct 2016
    2:09pm
    It must be nice to be so well off.
    Not Senile Yet!
    28th Oct 2016
    12:16pm
    As ALL Payroll employees now have their pays electronically paid to the Big Banks.....it is imperative that they are Regulated properly and are held accountable for Dodgy Practices!
    They have proven that Self Regulation simply does not work!
    ASIC....and other Regulation Bodies should NOT be allowed to have their Funding cut/manipulated by successive Governments !!!
    Our Protective Bodies cannot do their job if Funding is cut!
    This is something ALL Parties know....yet when they have the Numbers.....that is what they do!
    Next election ...think twice about electing a Party Puppet.....think more seriously about electing more Independants....so they do not have the majority to DICTATE!
    Old Geezer
    28th Oct 2016
    12:22pm
    All you have to do is regularly check your bank account and get onto the bank ASAP if you see anything wrong. If you don't practice good money management skills then only you are to blame.
    KSS
    28th Oct 2016
    7:01pm
    Not Yet Senile, actually you can have your salary paid to any account of your choosing. it does NOT have to be with Big Banks.

    28th Oct 2016
    12:38pm
    Neither the ASIC and the ACCC have been doing their jobs for years - either checking the actions of banking practices nor cracking down on petrol price collusion. The reasons for this being the incumbent government discouraging such action with the resulting diminishing returns of banking sectors' political donations and government excise tax on petrol.
    Another result of the sad state of our economy being what it is now, thanks to the past and present governments, more and more shoddy, unscrupulous loan companies are popping up, as is easily seen on TV ads. Many of these companies are founded and funded by "professional" people with a surfeit of money they wish to increase greatly by excessive interest rates or late payment penalties by borrowers and/or "launder" to provide themselves with a "clean" income. A loan of this nature will make you "move on" all right if you can't repay on time or receive a physical incentive from Guido to meet you side of the "agreement". So, unless you are more desperate than a cash-for-organ donor, steer clear or you will be wishing you had, even MORE than if you voted LNP in the last election.
    Old Geezer
    28th Oct 2016
    12:46pm
    All I see is a lot of foolish stupid people by hooked by an easy way of doing things. If only they would just realise that there is no free lunch. If you can't afford something then simply don't buy it.

    Where buy things to impress others that you don't like anyway. That is what it amounts to.
    Anonymous
    28th Oct 2016
    1:05pm
    In the real world Old Geezer, there is a group of people who don't have access to a lending authority which is government regulated or overseen. These people I would never classify as "foolish, stupid people" nor would I suggest that they are borrowing for non-essential items.
    Old Geezer
    28th Oct 2016
    1:06pm
    However the majority of people that get into financial trouble are not these sort of people.
    cupoftea
    28th Oct 2016
    1:06pm
    join a credit union
    Old Geezer
    28th Oct 2016
    1:07pm
    Never.
    Retired Knowall
    28th Oct 2016
    3:52pm
    I had a Home Loan with a local credit union some years ago and blissfully accepted my yearly balance report. That is until I was completing an IT Diploma and one of my assignments was to design an application that would compute Interest paid and balance on a Loan.
    When I developed this and ran the program with my loan details my balance was over $1K in error in the lenders favour. I contacted the credit union with my findings and the little darling on the other end of the phone assured me their computers are never in error. I asked to speak to the technical manager and after a brief discussion I informed him of the algorithm I was using. He asked me to ring back in 2 days as it was end of month processing and he would double check after that.
    Guess what, he found my calculation was correct and organised a credit of $11350.00.
    If you have a loan with any institution, periodically check it. You can purchase these loan checking programs on line.
    Old Geezer
    28th Oct 2016
    6:41pm
    If you know how interest is calculated then you can easily design a simple spreadsheet to do this. I used to do this with my loans and I could never find any more than a cent or two out.

    From memory I have been offered these loan checking for free in the past.
    Bomber
    28th Oct 2016
    1:27pm
    I have never used a big bank for long term investment as I need a better return on my money. The old saying "buyer beware" surely applies here.
    shirboy
    28th Oct 2016
    2:38pm
    My husband had MLC managing his super until he realized the big amounts of fees that were dwindling his account.
    calcutta
    28th Oct 2016
    4:14pm
    I paid fees to ANZ Bank for 8 months and received no financial advice during that time!! My financial planner had left and I was given a new planner. I had 1 meeting with the new planner, after that she ignored emails and phone calls from me requesting a review of my account. Her name never replaced my previous person on my account with the superannuation company, as she never got around to changing it!! Therefore she was never able to do transactions on my account, if I had wanted her to. I was able to track down my previous planner and sack her and ANZ. Apparently I could have claimed compensation, but I didn't bother. I was so glad to be far away from ANZ. Apparently, they are only interested in new customers and have no time for existing ones. It's disgusting.
    KSS
    28th Oct 2016
    7:06pm
    " Apparently, they are only interested in new customers and have no time for existing ones". That could be said of just about every company in Australia, telcos, energy, insurance, ......
    B J
    28th Oct 2016
    5:24pm
    I pay $1900 p/a for my financial adviser & havent seen her since July 2015.
    I think my small super fund is only paying her commission & their own fees so I have ask for a please explain what it is Im actually paying for
    Anonymous
    28th Oct 2016
    7:42pm
    BJ, the money you have been paying may entitle you to the adviser's active service, whether you use it or not you still pay, as the facility/service is there for your availability. Should you not want or require this active availability to advice you should be able to alter your adviser's role to a passive one where you only pay a rate per service (an hourly rate for your adviser's advice). A passive role should NOT incur a charge, if it does dump the adviser quickly.
    There are super providers who charge NO fees for administration and only for some switches - Colonial First State, being one.
    Good luck.