In­quiry scru­ti­nises Aussie fi­nan­cial ad­vice in­dus­try

Hun­dreds of thou­sands of cus­tomers com­pen­sated

The Star Malaysia - StarBiz - - Foreign News -

SYD­NEY: Aus­tralia’s four big­gest re­tail banks and wealth man­ager AMP have paid hun­dreds of mil­lions of dol­lars in com­pen­sa­tion to cus­tomers for poor ad­vice over the past decade, a ma­jor in­quiry into the fi­nan­cial sec­tor heard.

Fi­nan­cial ad­vice came under scru­tiny at the start of a fort­night of hear­ings by the Royal Com­mis­sion into cor­po­rate wrong­do­ing and abuse of power by Aus­tralia’s fi­nan­cial sec­tor, which could lead to greater reg­u­la­tion and crim­i­nal charges.

Rowena Orr, bar­ris­ter as­sist­ing the in­de­pen­dent in­quiry, said more than 300,000 peo­ple had been com­pen­sated and the lenders had ac­knowl­edged cases of fraud, poor ad­vice and charg­ing for prod­ucts that were not de­liv­ered.

“The fi­nan­cial ad­vice in­dus­try has been the sub­ject of con­sid­er­able scru­tiny in re­cent years. There is good rea­son for this scru­tiny,” she said.

Over the past decade, Aus­tralia’s four largest banks, AMP and oth­ers had paid A$383mil (US$297.5mil) in com­pen­sa­tion for fees paid for no ser­vice or losses caused by bad ad­vice, she added, quot­ing fig­ures by the cor­po­rate watch­dog.

The in­quiry, which be­gan last month and is sched­uled to last a year, is cur­rently fo­cus­ing on Aus­tralia and New Zealand Bank­ing Group (ANZ), Com­mon­wealth Bank of Aus­tralia (CBA), Na­tional Aus­tralia Bank (NAB) and West­pac Bank­ing Corp. In com­ing months, it will turn its at­ten­tion to large in­sur­ers and pen­sion funds.

Orr said the in­quiry had been in­un­dated with sub­mis­sions from mem­bers of the pub­lic com­plain­ing about poor ad­vice or be­ing charged for fi­nan­cial ad­vice, in­clud­ing in­stances when no ad­viser was as­signed to their ac­counts.

“Many sub­mis­sions re­fer to fi­nan­cial ad­vis­ers pro­vid­ing ad­vice en­cour­ag­ing Aus­tralians to en­gage in lend­ing they are not ca­pa­ble of ser­vic­ing over the long term,” Orr said.

The fo­cus on the ad­vice in­dus­try comes af­ter an ear­lier set of hear­ings last month re­vealed the banks had abused their power and rou­tinely breached laws when is­su­ing home loans, credit cards and other con­sumer loans.

The cen­tre-right gov­ern­ment agreed to call the in­quiry af­ter years of scan­dals in Aus­tralia’s fi­nan­cial sec­tor, in­clud­ing in­ter­est-rate rig­ging, ac­cu­sa­tions that some in­sti­tu­tions with­held le­git­i­mate in­sur­ance pay­outs, and ac­cu­sa­tions of money-laun­der­ing. — Reuters

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