As witnessed at the Senate Inquiry in Canberra into the scrutiny of financial advice yesterday, even the banks have been forced to agree that they are still behaving badly
CEOs of Australia’s major banks including the CBA, Macquarie, ANZ and NAB were all required to give evidence into their banks’ handling of financial advice and customer complaints. This is the fifth inquiry into wrongdoing by the financial planning arms of these major companies and it really does beggar belief that we are no closer to a badly needed Royal Commission.
Once again leading the charge were senators from very different points of the political spectrum: Labor’s Sam Dastyari, The Nationals’ John Williams and Independent Nick Xenophon. Also present was the CBA whistleblower Jeff Morris and many victims of the greed of the rogue planners. Whilst all banks declare they are on the front foot investigating all claims of wrongdoing and paying out many millions of dollars in compensation, they are still insisting on their right to investigate these claims internally. This is simply not good enough.
Australian retirement savings constitute a money pot equalling $1.9 trillion – an amount far in excess of our GDP. Bank-employed financial planners are still able to offer conflicted advice. They are paid on a commission basis that favours recommendation of their own bank’s financial products. We are told to save for retirement and yet, we have nowhere to go where we will be guaranteed independent and trustworthy advice concerning our savings. Australian consumers deserve a well-regulated financial planning system wherein planners are held accountable for their actions and charged with a criminal act if they are found guilty of white-collar crime. Not moved to another branch of their bank – or paid income protection insurance when they leave.
As Nationals’ Senator John Williams noted, rogue planners are like paedophile priests who can simply move down the road and set up again.
Given the obscene levels of bank profits in this past year, the $30 million paid in compensation by ANZ and the $14.5 million paid back by the NAB is chicken feed compared to the overall losses of these clients. Not to mention, as Mr Morris reminded the Senate Inquiry, the personal pain and reported suicides of some of the bank clients most severely affected.
Answering questions at a Senate Inquiry on one cold day in Canberra is not a substitute for a thorough root and branch review of our severely flawed financial advice system. Nothing less than a Royal commission can fully expose and eliminate the systematic misbehaviour and cover-ups in order to create the conditions for trusted and independent financial advice.
What do you think? Was yesterday’s Senate Inquiry the ‘showstopping’ event to change matters financial? Or is a more rigorous inquiry, such as a Royal Commission, needed to straighten things out?