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Thanks for the Royal Commission feedback

[The comments attached to this article were made by readers last week, and are republished this week to allow readers to see these opinions and add new ones if they wish].

It's hard to believe the Financial Services Royal Commission has heard only three weeks of witness statements, and one week on financial advice. There's enough material to fill a few books, and contrary to my expectations, significant changes are likely in wealth management.

A summary barely scratches the surface, but some lowlights include:

  • AMP giving 20 misleading statements to its regulator. Under section 1308(2) of the Corporations Act, it is a criminal offence for any person to give "false or misleading" statements to ASIC.
  • The head of the financial advice business saying he had not "turned my mind" to thinking about adviser commissions.
  • Collecting financial advice fees but not meeting the client, with the Commission calling CBA the "Gold Medallist" in fee-for-no-service.
  • An external "independent" board report for ASIC revised by AMP management through 25 drafts, including redacting the CEO's name.
  • An executive unable to identify what he was apologising for.
  • Using the ACCC acronym for the Advice, Culture & Compliance Committee.
  • Counsel accusing a CBA witness of "dissembling" and "misleading".
  • CBA's "hopeless" systems failing to identify adviser errors and not notifying the regulator of breaches for years.
  • Fees charged on the estates of dead clients for a decade after their death.
  • Failing to dismiss advisers who had clearly provided poor advice for years, and not warning their next employer.

Before the end of the week, AMP CEO, Craig Meller, had resigned, AMP Chair Catherine Brenner was under siege and the entire vertical integration model of the banks was in jeopardy with nobody capable of defending it. New penalties for breaching the Corporations Act were announced.

It's also apparent from the emails sent by independent financial advisers (with no affiliations to the big players) to their clients that the reputation of the entire financial advice industry has taken a battering, even the fee-for-service businesses who tried to avoid the conflicts.

The transcripts of witness interviews are here and videos plus the live webcast are here. Please use the comments section if you have a view on the Royal Commission that we can publish.

SMSF Trustee
April 29, 2018

Come on John, that's not Graham's job here! Make a submission to the Royal Commission about it.

Don't see what hope you have, though. If it was a trust then it doesn't matter if the ultimate parent is an ADI, a trust isn't guaranteed by them. Investors take the risk, including the risk that a wind up might be a complicated and costly process in an illiquid asset class. Or did you think that the 2.5% or more you were being paid over TD rates was risk free?

Could come back to the product being inappropriately marketed and sold by aligned advisers, in which case the RC is about to move on from that topic I understand.

John Hyslop
April 28, 2018

The proceedings to date have centred on bad and corrupted advice.

The scope of the Royal Commission also includes “… the effectiveness and ability of regulators of financial services to identify and address misconduct by those entities …” Financial services entity means … [among others] … an ADI (authorised deposit-taking institution) within the meaning of the Banking Act 1959 …”

Graham, I wonder if you could publish a piece which covers major investor losses through deposit-taking institutions, and the ineffectiveness and inability of regulators in identifying and addressing such?

I have in mind personal experience of a mortgage fund from which we were paid 7.5% p.a. returns monthly for ten years until the GFC. The Responsible Entity appeared to have workable plans to trade out of its illiquidity situation through an orderly sale of assets. The Regulator appeared to give investors the impression that there was no cause for concern. However, the Responsible Entity went into voluntary administration. Since then a court-appointed receiver has been on the case for about five years, and current expected payout to investors is around 13 to 14 cents in the dollar; the receiver has recently given investors his program for the next twelve months, with possible payout in 18 months.

Graham, I can provide you more detail if you are interested in following up on this.

Peter B
April 26, 2018

Financial planners' lack of education, training, professional attitudes, but an abundance of unethical behaviour are frequently offered to explain how people are talked into placing money where it will do them the least good.
However, on reading transcripts, these qualifications appears to be the requirements some companies seek in recruiting planners. Anyone else notice this?

April 26, 2018

Speaking of financial advice and advisers. What’s a reasonable annual fee charge? I know what I ‘m paying just wondering what the average is?

Neil Dearberg
April 26, 2018

Two issues that seem to have been overlooked:
1. ASIC does not employ staff who understand "good advice". An ASIC audit simply discovers disclosures and that the font on business cards is of a sufficient size. Had their auditors or investigators known what "good advice" looked like, Storm would have had their double gearing for commissions strategy negated very early. Similarly, inappropriate advice to rollover from an employer fund, operating quite nicely, into an integrated adviser's parent fund. Some years ago an ASIC investigator advised that 'no action' would be taken against the Adviser who failed to disclose a $11,000 and $16,000 implementation fee and failed to provide an SOA for the second investment - but did offer "to knock one up now if you like".
2. High repetitional industry leaders have been, seemingly, quiet in defending good operators to the media and clients who may be somewhat distraught at what they are hearing and seeing.

I was a planner for 23 years and from the commencement in 1985 operated on a fee-for-service basis. I saw the development of the advice industry and it was always a bit of a mystery that commissions continued to be paid. Although I retired 10 years ago, I know there are still very good advisers out there - their story needs to be told.

April 26, 2018

As with the Royal Commission into Trade Unions etc recommendations, penalties need to include jail time and substantial fines for directors and the most senior executives not fines on the organisations or banks which are merely an impost on innocent shareholders.

This will quickly change behavior. Systems and processes are secondary.

Remuneration levels at the highest executive levels and directors' fees should be substantially - say 80% - cut. Shareholders are employing monkeys who are over supplementing their peanuts. As with politicians, executives just as competent or incompetent can be employed.

Frank Harris
April 25, 2018

I'm a financial planner. I work for an accounting firm,
not aligned to any institution. A CFP, plus a Masters of Commerce in Finance. I've spent so much time and effort gaining as much technical knowledge as I can to deliver great outcomes for clients. I am so ashamed to tell people I'm a financial planner. Last few days I've considered quitting the industry (it is not a profession ). I am sick of being tarred with the brush of a structurally corrupt industry.

I'm not going to quit though. Our society needs great advice. I want to be part of cleaning up this industry, which will take decades.

The start of a solution is outlawing any agent of a financial institution calling themselves financial planners. They are agents and hopelessly conflicted. Gaol time is also required for severe misconduct. Asset based fees also need to go.

SMSF Trustee
April 26, 2018

Way to go, Frank. Like the planner that I use, who has done nothing but try to work out the best ideas for me in terms of setting up the SMSF in the first place, the platform to have it on, the investment approach and specific investments to use, he's been fantastic. He's licenced by AMP and feels very let down by the senior people in the firm who he says have been trying to fix things that weren't right, but clearly haven't moved fast enough.

There's an issue with the changeover last year with the move to tax TTR pensions, which resulted in my moving all my fund into accumulation. The issue is what to do about the capital gains and losses in the fund as at 30 June last year. Of course I can work through that myself and make a decision, but I work full time. It's great to have someone like my planner to compare notes with so I can be confident that I'm making the best decision for the Fund and the other beneficiary, my wife.

We need good planners, so please all the Frank's of the world, don't give up.

But please, CBA and all you others who align your planners with your own products, get out of the business. I hated that CBA bought Colonial First State and put aligned planners into a business that had done really well servicing independent IFA's. The cultural differences were always going to be too great. David Murray is regarded as a hero in the financial sector, when he was the one who oversaw the degradation of the great culture at CFS by changing their focus from IFA's.

Independent planners and investment product manufacturers who need to manage funds well in order to earn the right to have advisers suggest them to their clients - that's the better way.

Gen Y
April 24, 2018

Re the advisers incorrectly filling out the beneficiary forms (NAB case). This goes to Chris Cuffe's article a couple of weeks ago about the lack of innovation in the industry when it comes to form completion. The advisers' intentions were in the clients best interest, but the process of filling in these complex paper forms failed them. Feel sorry for the advisers getting dragged over the coals on this one.

April 23, 2018

And when all the mud (?) has been flung and the fan stopped turning, what is the outcome? There will be more regulation, reporting, bureaucracy, more jobs in the Public Service staffed probably by people who were involved in the initial shenanigans. And finally the cost: by all means send the criminals to jail, but what of the anticipated fines on top of the added regulation costs? . Added all together, the costs will be paid by me and all the shareholders who will see their "sensible" investment in blue chips decline substantially. So, why will the innocent be the ones to pay at the finish?

Ross Bell
April 22, 2018

Many interesting and heart felt comments.
The one standout comment was the call for an government guaranteed lifetime insurance scheme, capped at a moderate sum.
Just reflect, the reduction of the billions annually paid in fees and the loss of the carpetbaggers, Still the ability (for those fortunate enough) to save and invest for retirement outside the current irrational framework.
What chance from the people in the Canberra bubble?

Gary barnes
April 22, 2018

The fact that whistle-blowers exist in these and other organisations who have the morals to see that something rotten is going on means that others must also realise this. Yet whistle-blowers are routinely demonised by the powers that be. I think they must know they are wrong. So really they are just crooks masquerading as upright citizens. And yet business culture allows them to think well of apart from a conscience transplant? Maybe really real penalties like jail, loss of salary serious company fines

Len Williams
April 20, 2018

After just a short viewing of this afternoon's proceedings, it seems there is a reluctance to dismiss poor advice performers; and when they do, allow other groups to employ them by not passing on all the information when a reference is requested.

April 20, 2018

Where was ASIC when all this criminal behaviour was happening? ASIC should also be heavily in the spotlight as a result of this RC. They are supposed to be the regulatory watchdog who has done utterly nothing to police this past behaviour.

S Fisher
April 20, 2018

As a long term adviser, been both aligned and non-aligned, the best way to fix this whole debacle is to remove banks and product from the equation and allow open APL’s. Stop this reward for “product” sold and concentrate on the right strategy for the client. As it stands, the aligned adviser is held captive by their Licensee to only recommend products from their APL, more often and not only a suite of products that primarily focuses on their own brand.
Let the adviser make the decision which provider/product offering is best for the client and stop holding them over a barrel. It is only a small part of the equation in strategic advice both initially and ongoing.

April 20, 2018

Graham Hand, I was a little like you at the outset - why have a Royal Commission?

I was looking at it from my early experiences in the industry in regional NSW. As time went by though, I saw developments that have contributed to what we see today. Having left the industry some time ago, what I see from the Royal Commission I find disgusting, but it is not surprising. These problems don't just exist in the financial services world it is everywhere!

Yes, extend the Financial Services Royal Commission and better resource it, then the next step is to properly look at our countries parliaments and implement the rules and independent supervision so badly needed - they cannot, like the financial institutions have shown, manage and supervise themselves.

The professions, whose behavior is assessed according to internal codes of conduct, should be next in line.

Ken Gibson
April 20, 2018

What an appalling situation.

Once again, the demons Arrogance, Power and Greed have won out, this time invading our most prestigious financial institutions!

The problem is culture and culture is developed from the top.

Having spent a lifetime in banking and finance often undergoing training in policies and procedures, it is hard to understand how these practices uncovered in the RC have been overlooked. A few observations:

The Boards have been asleep at the wheel or have been deceived or have been distracted by their other directorships - employees are not allowed to hold down two jobs, so how can directors carry put their important roles with multiple directorships?

The CEO's and senior management have been asleep at the wheel or incompetent or distracted by other roles/activities

What have Audit Committees been doing during these times? Complacent or incompetent?

What has happened to internal auditors who report directly to CEO's? Incompetent or ignored or untrained or understaffed?

One can draw up all the best policies and practices in the world, but if they are not enforced and embraced through a customer focused culture built on integrity and trust, it will eventually turn to custard, as we are now discovering

Operators at the coal face are clearly culpable, but more so senior management AND the executives, who are very highly compensated for their demanding and responsible jobs.

Failure to carry out their duties at an expected level of competence should attract much more than the usual slap on the wrist and should at least include fines equivalent to all bonuses from the start of these practices and bans from CEO and Board roles for a lengthy period etc.

The Club has to pay its dues.

April 24, 2018

May I suggest Leighton, that advice is not just conflicted, its down right negligent. A recommendation to incur mortgage insurance for a gearing strategy? Even the most toothless of internal compliance regimes would (should) disapprove of this. When was this advice issued? I would suggest that a few letters to WBC will result in that $2,500 advice fee being refunded very quickly!

Though it raises a point that is often overlooked (here and elsewhere), that being the fallacy of the 'open APL'. To suggest that product conflicts (and even sales targets) alone would drive a professional adviser to deliver this kind of advice is misguided at best, as is the proposition that an open APL and/or independent ownership structure would somehow rid the industry of conflicts and poor advice.

This is poor advice, regardless of the shingle above the door, it was delivered by someone with highly questionable competency, ethics or both. Just imagine for a minute what they (and the many others like them) would be capable of outside the structure and frameworks of a major institution! Additionally, if the regulator is struggling to effectively police just 6 major institutions, one doesn't need much of an imagination to understand what is happening in the market outside their gaze.

I'm by no means defined the behaviour of those currently in the spotlight, merely calling out what is still occurring outside of it and pointing out that obvious solutions might not be effective ones (i.e hows the banning of commissions working out for industry reform?)

April 20, 2018

We were encouraged by our WBC relationship adviser to get a WBC financial planner prepare a plan for our future. We paid them $2500 for the plan which hadn’t listened to our constraints ignored our situation and recommended that we;
- drawdown on home equity $500k
- because our LVR would then be higher we would need WBC mortgage insurance
- get additional death and tpd insurance
- invest the $ in a BT discretionary trading fund ( with fees at 1.5% of FUM)
- pay establishment fees of 1% of FUM
- pay an annual advisor fee $2500

Whilst indicating we could get 10% return

All products were WBC or BT with no external options considered

The look through fees were 6% in year 1 and 2.5% each year after. Plus they make margin on insurances and mortgages etc.

I pointed out there was no alignment of fees vs performance and that I was happy with 5% after all fees. I offered them 50% of all returns over 5% asan incentive to align fees. Needless to say my offer was rejected .

A complete misalignment of all risk being mine whilst all return being theirs.

I didn’t invest, so the $2500 I consider as education fees.

Massive conflicts. Hope they all get a massive kick in the pants

April 20, 2018

My summary comments are:

1. There is a huge cultural problem in the financial services industry not just the banks. It is impossible to fix culture in an organisation unless there are wholesale changes of boards and almost all senior executive roles. Even then it takes years and the only way to make sure culture changes is to "execute" some staff ( figuratively speaking) - I speak from personal experience working inside large financial organisations

2. There seems to have been a total failure of risk management functions inside the financial institutions. The same applies for internal audit. Risk management and internal audit functions should hang their head in shame.

3. The development of products within these organisations is a broken process and it is obvious. They ignore legal advice and obviously do not identify and consider all risks.

4. While many people may point the finger at banks in my view the real problem is with the quality of the financial advisors - vertical integration and commission has just made the problems bigger.

5. Some executives who have appeared at the RC have lacked credibility and some obviously have none. How can these people can continue to keep their jobs

6. I agree with many comments about needing more regulation, greater powers for ASIC, improving executive remuneration etc. BUT none of this will deal with the basic dishonesty of people and lack of just doing the right thing by people. You can never put in place enough regulation to address dishonesty

7. The lawyers and consultants who has been advising financial financial service companies are just as culpable.

These comments are based on my 35 years experience working inside large general insurers and as an advisor to many governments and insurers.

SMSF Trustee
April 19, 2018

An observation on how AMP has fallen - thinking out loud really.

When they were a mutual, their clients and their 'shareholders' were essentially the same. Investors/policy holders were the members and the success of the organisation came back to them through bonus growth in their investments.

Once they demutualised and listed, they created a schism in their stakeholders. That's not necessarily a problem, but if the cultural implications aren't explicitly recognised and managed at Board and senior executive level, then the pressure to favour the shareholder's interests over those of clients becomes intense. It seems to me that they didn't do enough work on how to manage the new organisation culturally and so bad behaviours weren't identified early enough nor dealt with.

Things weren't perfect as a mutual of course. The misalignment of interests for many years was between policy holders and the salesmen who sold them those policies. I learned a lesson personally back in 1981 when I agreed to a life policy that would eventually provide capital when my children (unborn at that stage) would be ready for high school. When I got the documents with all the details I was aghast to realise that the rate of return on them was worse than just putting my money in the bank! The salesmen said, 'but you get lots of tax benefits from this structure', to which I replied, "no, YOU get all my tax benefits through the trailing commission you'll earn for the next 15 years". I used the cooling off period to pull out of the contract.

There'd be a better chance of fixing that sort of culture under a mutual structure than what AMP became, however.

The tragedy of all this is that there are mostly very good, ethical, client focused people working for companies like AMP who are going to be tarred with the same brush by this. I deal with some of them - my adviser, my AMP platform, the AMP funds I use as part of the SMSF. They have been badly let down by their corporate superiors.

April 20, 2018

"The tragedy of all this is that there are mostly very good, ethical, client focused people working for companies like AMP who are going to be tarred with the same brush by this......... They have been badly let down by their corporate superiors"

Hear, hear to that sentiment. What we are hearing about at the RC (and have heard about previously) are very poor actions and behaviours by a small minority of people working in theses institutions, certainly not everyone nor even indeed a majority.

Graham Hand
April 19, 2018

Thanks for the comments but some we cannot allow due to naming names too precisely. We're eager to have a debate but not provide an open forum for people to air their grievances against particular advisers.

Graeme Head
April 19, 2018

Just watched the interview with a client who went to Westpac for advice. Taken to the cleaners by the adviser as shown by the fees paid.
I was surprised that the legal counsel didn't ask about the advice provided - you couldn't start up a SMSF for the reasons they wanted but this wasn't questioned. Surely there could have been some interest in asking about the potential (or not) of the quality of advice provided.

Les Heil
April 19, 2018

No doubt a Royal Commission was necessary and for it to do the best job possible with tangible benefits in the future it must be given the appropriate TIME. It must be expanded.
Also it would be good to see comment on the following. The banks keep talking about the hundreds of millions they have paid out in compensation. (We really are good fellas) In truth in many cases the compensation more often than not amounted to individual customers who have been financially abused by the banks and finance companies came to 10 cents in the dollar or less. The Big Million Dollars amounts makes it sound as if they got a conscience and did the right thing. But in truth is was Shut Up money. Clients found out the hard way that taking the banks to Court - unless under a Class Action was financially impossible. The banks knew that -- offered them a pittance -- and so many folk who were financially ruined had no choice but to accept. Look at Storm Financial -- a very large part of that debacle was the responsibly of the Banks who loaned money to many retirees who had no chance of repaying if things went bad -- as they did in 08/09. Suicides and deep depression followed.

Peter Callaghan
April 22, 2018

I've been there too. I was once a client of a Perth company who got us all into debt financing their dodgy land developments, many of which went under after the NAB foreclosed on the loans. We took their advice, and trusted the NAB as surely it would have done due diligence on these projects? Wrong, and they also only used their own tame valuer to reset the valuations down to 2003 levels, no other independent valuations were sought or entertained. I was lucky to extract myself as I worked two jobs for 4 years to pay off the debt, others lost their homes and their self respect. No compensation was offered by any of the parties involved, and ASIC were, of course, utterly useless.

April 19, 2018

So the royal commission isn't commission into the banks but into advice and brokering.
The big losers look to be the almost completely unregulated financial advice industry (where actual qualifications and knowledge are unnecessary and the mortgage brokers who are purely a commission based business.

Hopefully, after the Blue Sky scandal, they also investigate whether the superfunds actual have the assets they say they do. I suspect BLA is just the tip of the iceberg.

Ralph Drayton
April 19, 2018

It's good to see them finally being dragged kicking & screaming before the RC. My wife was ripped off and complained to various government bodies and lawyers but would always end up stressed out and crying after each phone call. She settled for a much smaller amount than what was due to her as she couldn't take the drama anymore.

April 19, 2018

People used to say banks were too big to fail - now more like too big to manage and trust (eg Citibank at the GFC)

But frankly, the regulators have been totally asleep at the wheel - and the Boards of the banks seem to live in a parallel universe, often without any banking experience at all - ...what do some of these people know about banking and regulators ?

Some of the Board members on our major banks are very weird choice.

Peter Worn
April 19, 2018

As an industry participant (I'm only 38) for 17 years, I cannot say that any of this is surprising. Perhaps if the industry applied the same efforts to systems, technology & process as it does to running conferences we may not be in this position. When you have poor leadership, misaligned incentives, broken value chains and poor education standards this is what you get. Product and Advice can no longer cohabitate under the same roof.

April 19, 2018

Graham - despite your commentary, it did not take the Royal Commission to uncover any of the material thus far revealed. The current hearings to which you've referred to were uncovered by ASIC and have been reported publicly over a number of years as ASIC works through the complex remediation (repayments and rectification) by the advisory firms of the banks and AMP. See the 2015 statement here then here where a total of $176m is estimated to be returned for the dodgy 'fee for no service' charges (most by the 'gold medal' winning CBA) and then here for the December 2017 update for this huge and ongoing investigation across all major licencees. Each of these media announcements have been reported on but only in a minor way by the press. All that the Royal Commission is doing - and rightly so - is to focus and showcase the wrongdoing. I know this having worked for a bank on some of the responses to these matters. I'm sure some new things may be unearthed at the RC, but nothing has so far.

April 19, 2018

ASIC just imposed a $3m fine on the CBA for overcharging customers in 2007-2015. CBA has paid compsentation of $88m on this single matter to 31,500 customers.

To me (and I think the man in the pub) woul think is a very low fine and far too long after the damage has been done - do you really think AISC is operating as a efficient and to be feared regulator ?

More like a toothless tiger, hence CBA misleading it multiple times - as Commissioner Hayne says, the gold medal award for fee for no service.

And you nothing new has been unearthed by the RC - the AMP has certainly disclosed some things we didn't know ie misleading the regulator and reworking/editing so called independent reports to the regulator.

April 19, 2018

One issue that doesn't seem to have come out is the practice of banks and wealth managers owning and controlling "independent sounding" advisers and brokers. Most consumers would be surprised to know that financial advice firms such as Hillross, Charter, Securitor, Magnitude, Millenium 3, Shadforths, Count, Financial Wisdom, are all owned and controlled by the banks, AMP or IOOF. They would also be surprised to know that Aussie Home Loans is owned and controlled by CBA.

ASIC has made a big deal at the Royal Commission about AMP controlled planners recommending lots of AMP products. But this misses the point. Consumers would expect AMP branded planners to recommend AMP products. Those consumers have made a conscious decision to deal with AMP. But consumers would also expect Hillross and Charter planners to be independent, rather than controlled by AMP. Consumers are being deceived by these "independent sounding" brands.

If the Royal Commission doesn't recommend the complete eradication of vertical integration, let's hope they at least recommend an end to institutionally controlled advisers and brokers hiding behind independent sounding brands.

April 19, 2018

For vertical integration in financial advice to be truly eradicated they will need to also include Industry Super Funds with internal advisers, and also the SMSF License's issued to accountants, who by definition of the license can only recommend SMSF's.! Bring it on, I've waited 30 years.

April 19, 2018

I am glad to see your mea culpa. When I read your "10 reasons not to hold bank royal commission", my first thought was to cancel my subscription to your newsletter.

Jeff Morris
April 19, 2018

Thanks for the mea culpa Graham. You're a better man than Scott Morrison.

Jeff Morris
April 19, 2018

Thanks for the mea culpa Chris. You're a better man than Scott Morrison.

Bruce Gregor
April 19, 2018

My observations are as follows:
1. the 1997 Wallis Commission and then current government erred in giving superannuation and life insurance (and ultimately financial planning) to the 4 pillar banks which already had the privelige of lender of last report access. This has lead to low competition and accountability for the relationship between client and institutional personal adviser. Ironic that the banks are selling out of insurance now after the mess has been made.
2. The are a large number of people who do not have enough financial assets or financial education to benefit from much of the advice services offered
3. If the government provided a government guaranteed lifetime retirement pension insurance scheme (up to a modest level) these people would have no need for this level of advice
4. In a country that is the gambling capital of the world and housing unaffordability champion, the commission's rhetoric and media focus is misplaced.

Philip Carman
April 19, 2018

I'm sorry mate, but if you ever really had those 10 reasons you were missing the whole point of why the RC was called. Our financial services industry has been a disgrace and full of illegal practices for the four decades I've worked in it (no cause/effect implied there!) and I've written hundreds of articles explaining the how and why of the AMP/MLC/NML scandals of the 1980s, through to the tree-selling schemes of the 1990s, the margin loans skullduggery of the Naughties and the banks/"advice" vertical integration of the teens...and that's just the tip of the iceberg. What drives it? Australians' unwillingness to pay tax would be at the top of the list - because that drives demand for dodgy advice in the first place, allowing such rorts to become widespread and "conventional wisdom" in an industry that barely considers risk and when it does, it describes it in terms of statistical variation rather than losing money! I could go on, but I won't. Stop acting surprised and start writing articles that help fix the problems rather than adding to them. It's not hard. The evidence is all around you. The crooks are amongst us. Their victims could be your parents or your children. Do it before it's too late.

April 22, 2018

I agree. I have worked for a few of these large institutions over my 25 years in the industry. The issues that have 'suddenly arisen' from the RC have been around as long as I have. Management at many levels have not been working in the client's interest, they have been working for 1 person only. The 'greed is good' mantra has echoed in the hallways of most financial institutions since Gordon Gecko pronounced those famous words. The incessant need to grow 'profitability' is insane. When is enough, enough?

The truth is that most people can save, invest and retire without the depth of advice of financial planners but the machine continues to tell them otherwise. A simple discussion and action plan will stop most from falling into the hands of self-interested, inexperienced and uneducated 'planners'.

May 01, 2018

They were so bad you managed to work with several over 25 years?
I moved from an independently owned business into a licence owned by a big 4 bank. My issue with them was not greed, but complete apathy. You have a large number of individuals working for their own benefit (bonus, etc.) with no team work evident. Each time there is a scandal, the compliance team double down on paperwork requirements for advisers (as if that solves everything). These requirements take up adviser's time, meaning less time servicing clients and you get clients paying for no service.
The lawyers run the wealth divisions now (along with HR). Common sense has gone out the window and I wonder why they don't just exit the wealth sector altogether (advice at least). It's all risk and no reward for the banks. The fact that they have so much over the top compliance tells you they have no appetite for advice. Someone with a commercial mind needs to step in and realise the amount of money and angst they'd save it they sacked all the compliance goons, half the HR and got out of advice completely.
The banks have also stepped into the PC world and tried to win hearts and minds with their marketing behind the latest causes. To do this while generating returns for shareholders has been like trying to move in two directions at once.

I'm glad the RC went after the decision makers at least. There have been plenty of bad advisers, but for the first time we're seeing the heat put on the clowns who created the culture. Look forward to more of them being out of work. They've never had a clue about the clients because they've never met one.

April 19, 2018

Of course miscreant company execs should go to gaol if found to have lied, cheated and deceived as so many have.

How else will this behaviour be rained in? They get massive bonuses if successful and (up till now) a slap on the wrist if caught.

Despite thousands of regulators being employed to idly sit back and watch, it is only when someone like Adele Ferguson gets involved that anything happens. Laissez-faire only works for so long until the community gets fed up to the back teeth.

We're now well past that stage and action, not tokenism, is necessary for everyone's benefit.

April 19, 2018

The Commission is uncovering more of the behavior that whistleblowers like Jeff Morris, Benjamin Koh and others had exposed. They were fired or forced out, whilst management covered up and got bonuses. Financial services companies have gotten the behavior that they incentivised. The QC's are incentivised to expose the corruption and they are doing a great job of it.

The overhanging question remains, why has ASIC not done over the last decade what the royal commission has done in a few months? When they issue a fine of $3 million after customers are overcharged $88 million they are encouraging theft not honesty. When will a large financial institution see a $1 billion fine or their licence suspended? There's no lack of misconduct that would justify this.

David Farrell
April 19, 2018

The AMP guy was my favourite so far....but I'm sure there's more to come! I hope the commission will drill into the Financial Ombudsman Service, ASIC and the ACCC and their lack of teeth.

April 22, 2018

More like ASIC and APRA were too comfortable.

April 19, 2018

I'm surprised that you and/or your founders/editors are so surprised.

April 25, 2018

Exactly; if a novice like me knew about it, then how come the experts didn't?

SMSF Trustee
April 26, 2018

Oh come on, chaps. Graham said that the planning scams were well known. It's at least arguable that, of themselves, they didn't warrant a Royal Commission.

It's not uncovering so many of these poor practices that has prompted the mea culpa. Rather, it's the revelations of the extent of lying to the regulators which points to a much deeper issue than simply whether FOFA has gone far enough. I doubt very much that either of you had any idea about that practice. (It didn't feature in your submission against the rollback of FOFA, Phil.)

It's easy to claim after the event to have been the expert everyone should have been listening to. Please don't make Graham Hand out to be some sort of ignorant observer.

Have either of you read "Naked Among the Cannibals", his expose of the banking industry in the 1980's?

April 29, 2018

Smsf trustee, not sure where your reference to my fofa submission comes from?


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