The Royal Commission into the financial services industry has uncovered serious dishonest behaviour by the banks, financial planners and other financial institutions. The fraudulent behaviour in the financial services industry is very disturbing. Charging people a few years after they have died; poor advice from financial advisers; falsely witnessing signatures and so it goes on. As of 27 April 2018, the Commission has received 4501 public submissions.
The worst offender out of the big four banks is the Commonwealth Bank of Australia (CBA). Now it has just emerged that the CBA lost statements linked to 20 million customer accounts. While CBA has assured customers, their personal information has not been compromised I am sure there are people lining up all over Australia and changing banks! But would that improve things? This is the dilemma many woke up to this morning.
Then there is the ANZ bank who knew that many of their financial advisors were giving poor advice and their behaviour was illegal but did nothing about it. About 15 years ago we received financial advice from an ANZ bank financial adviser. We looked at the advice closely, the fees and risks and decided against rolling my superannuation into ANZ products. This was fortunate for us but unfortunate for others who were deceived through trusting their so-called “financial adviser”. Two out of three financial advisers do not have any qualification. There are no requirements for an educational standard, nor does the industry have a code of conduct.
On another occasion seven years ago, we engaged an independent financial advisor for advice. He was a smooth talker, sitting behind his desk and attempting to bamboozle us with graphs and financial language. No charge for the first two-hour session! Later we returned for further advice that we paid for. Then on the third occasion he wanted me to sign forms to give him control of my superannuation, that is, authority to get access to and make changes. He then put a wad of documents under my nose and asked me to sign in several places. No time to read and review. He would have taken his fees every year, whether the products he recommended performed or not. I took the documents away and quickly terminated all ongoing contact. While the Royal Commission is exposing the “bad” behaviour this is too late for many people.
I heard of one couple who received financial advice from AMP, rolled their superannuation into an AMP product and one-quarter of their superannuation disappeared in a single fee. So dire is the situation with AMP that the CEO resigned on 20 April and on 30 April the Chairperson resigned.
I know of a company in Toowoomba giving financial advice that only offers AMP products. I warned a Facebook friend last year, who on several occasions “liked” their page. I gave her information about the importance of seeking independent financial advice with an adviser that was not linked to a company such as AMP. Better to get advice on a “fee for service” basis. I don’t like to see people “ripped off”! Unfortunately, she did not like that I was questioning her decision-making and she “unfriended” me! I wonder what she is thinking now? I hope she is one of the lucky ones that managed to sidestep the sink holes of poor financial advice. Or will she be lining up at one of the many law firms as part of the class action for alleged misconduct, including lying to the corporate regulator Australian Securities and Investments Commission?
The Royal Commission has not coming early enough for some hard-working Australians. One of these is the Melbourne nurse who got poor advice about retirement planning. This nurse and her husband followed Westpac’s financial adviser’s recommendation and sold their home to achieve their retirement goal of a Bed & Breakfast. After this, the bank would not lend them the money they needed. They are now living in rented accommodation with their retirement dreams in tatters. They are just one couple that have lost their life savings and hopes for the future. The Royal Commission into the financial services industry is well overdue. The financial services industry needed a good “shake-up” and I hope, due to the Royal Commission, the future will be very different from the scandalous past.