KEY SHOCKS AND REVELATIONS FROM THE BANKING ROYAL COMMISSION
THE $1 BILLION FEES-FOR-NO-SERVICE SCANDAL
Royal commissioner Kenneth Hayne QC’s interim report was particularly scathing over the large and endemic fees-for-no-service problem, which he labelled dishonest and inexcusable.
The corporate regulator expects compensation will exceed $1 billion for customers charged for advice they never received.
AMP suffered the biggest fallout over the scandal (see below), while the Commonwealth Bank earned the dubious title of the “gold medallist” for charging customers for financial advice they never received.
CHARGING DEAD PEOPLE FEES
Three of Australia’s biggest financial players have admitted charging dead customers amid the wider fees-for-no-service scandal.
It involved some CBA advisers, including one who charged a dead client’s estate for more than a decade, a CBA superannuation business and NAB super trustees deducting fees from deceased members’ estates.
AMP charged thousands of dead superannuation customers for life insurance, despite knowing there was no longer a life to insure.
THE AMP SCANDAL
The fees-for-no-service scandal revealed at the royal commission in April claimed the jobs of AMP’s CEO and chair, led to a share price slump and sparked shareholder class actions.
The inquiry’s barristers recommended Australia’s largest wealth manager face criminal charges for lying to the Australian Securities and Investments Commission.
Mr Hayne in his interim report said AMP adopted an attitude towards the regulator that appeared to him not to be forthright and honest, but he left the matter in ASIC’s hands.
Dover Financial Advisers sole director Terry McMaster sensationally collapsed while giving evidence to the royal commission after being accused of lying.
Dover later agreed to stop providing financial services and Mr McMaster permanently left the industry.
AGGRESSIVE SALES TACTICS
After Freedom Insurance pressured an intellectually-disabled young man with Down syndrome into buying insurance over the phone, his father struggled to get it cancelled.
He eventually had to get his son on the phone to say he wished to terminate the policy, with a recording clearly showing him struggling to articulate the words let alone understand them.
Financial company ClearView admitted it committed criminal offences by making 300,000 unsolicited cold calls to sell life insurance.
The inquiry also heard about the aggressive tactics of financial entities pushing inappropriate funeral insurance, high-interest loans and other products on to Aboriginal people with poor financial literacy.
Mr Hayne said in relation to funeral insurance, the evidence pointed to predatory behaviour by insurers and salespeople.
The inquiry heard emotional stories of farmers’ problems with banks, including some drought-stricken graziers being hit with hefty penalty interest for defaulting on their loans.
ANZ’s 2010 acquisition of Landmark also featured, with Mr Hayne finding the bank was ill-prepared to deal with farmers facing hard times and did not understand their emotional connection to the land.
The commission also examined problems faced by small businesses, but former Bankwest customers who complained about their treatment by the Commonwealth Bank were left disappointed.
Mr Hayne concluded none of the several different reasons advanced in support of the allegation CBA deliberately engineered defaults of business loans made by Bankwest holds water.
THE COMMINSURE SCANDAL
CommInsure faced up to $8 million in fines over misleading ads about trauma coverage for heart attacks but walked away with a $300,000 “punishment” – in the form of a community donation – with the regulator’s blessing.
CommInsure apologised for wrongly denying a breast cancer sufferer’s insurance claim because she did not meet its outdated definition of radical breast surgery involving removal of the entire breast.
HOME LOAN FRAUD
A syndicate of National Australia Bank employees took $2800 bribes for fraudulent home loans with the money exchanged in white envelopes passed over the counter, the inquiry heard.
Australian Associated Press