When it comes to banking and financial planning in Australia, the industry is awash with fraudulent activity, conflicts of interest, and just plain bad advice.
Let’s start with the banks.
All four of Australia’s big banks are up against the wall for actions that range from slightly unethical practices to downright criminal behaviour. The Commission will be examining:
• Fraudulent loan applications at National Australia Bank and Aussie Home Loans (the latter of which is owned by the Commonwealth Bank of Australia)
• Questionable car financing deals made by Westpac and ANZ
• Unsuitable credit card limit increases at Westpac
• Credit card fees at Citi
• Add-on insurance products sold by CBA
• Unsuitable overdrafts and administration problems at both ANZ and CBA
In addition to bad banking practices, financial advisers are also coming under fire. It has already been revealed that:
• 85% of Australian financial planners are associated with “financial product manufacturers” in some way - a clear conflict of interest.
• Financial advisers at the big four banks and AMP have not acted in the best interest of their customers 75% of the time and in 10% of examined cases their instructions have left customers “significantly” worse off, according to an ASIC report released in January.
• Financial planners are behind more than 33% of the serious misconduct cases identified by the Financial Ombudsman Service (FOS) since 2012.
• ASIC - the body meant to regulate the financial services industry - cannot be trusted to do its job properly. In 2014 a Senate inquiry called for a royal commission after it found ASIC had been too ready to believe information the Commonwealth Bank gave about its financial planning division.