CBA charged the dead
Even in the afterlife banks are after you.
At the Australian Royal Commission into banking misconduct, the Sydney Morning Herald (SMH) reports that the Commonwealth Bank of Australia (CBA) has admitted its planning arms breached the Corporations Act when they charged clients – including some who had died – fees for services they did not receive.
These kinds of revelations do nothing to restore the reputation of the big four banks – ANZ, CBA, NAB and Westpac – as the commission runs its course.
For example, back in January, ANZ’s CEO sent a long letter to his staff urging the restoration of customers’ trust.
To give you some background, in the aftermath of the “Global Financial Crisis”, the Financial System Inquiry found ANZ knew more than 80,000 Australians lost billions of dollars due to the collapse of managed investment schemes, poor financial planning advice and other misconduct.
People, unsurprisingly, got well and truly annoyed with banks – and according to the ANZ CEO this included the size of its profits, “the amount of money senior executives earn, how hard it can be to switch banks” and “the unfairness of many fees and charges”.
In the latest developments at this week’s Royal Commission, SMH says the CBA said it accepted that it had breached its requirement to act efficiently, honestly and fairly in respect to some clients.
The bank noted it had already paid remediation of $118.5 million to its affected clients. It has also been subject to an enforecable undertaking from the corporate regulator as a result of its fees for no service issues.
It was not all about admitting failings.
Elsewhere, CBA refuted other open findings made against it that it knew its advice businesses did not have adequate resources to provide ongoing services.
CBA also pushed back on a preliminary finding by Rowena Orr, QC, that its planning arms Count and Commonwealth Financial Planning had not reported “significant” misconduct and other breaches to ASIC within the required ten-day time period.
Westpac refuted all open findings made against it at the commission, including that a failure of its systems to monitor its planners was responsible for misconduct. It also refuted suggestions that its conduct fell below community standards.
ANZ Bank’s RI Advice and M3 Financial planning arms also refuted all preliminary findings of misconduct against it as a result of its “rogue planners” and its charging clients fees for services they did not receive.
There was no word from SMH on NAB.
The implications and soundbites from the commission may well bring some schadenfreude to fintech firms – who are seeking to bring the big four down a peg or two (hundred).
In the wake of the commission, and as reported yesterday (10 May), the nation’s government said it plans to introduce open banking reforms from mid-next year.
Stuart Stoyan, chair of industry body Fintech Australia, says it will be a “game-changer for consumers and businesses” and “drive a new wave of fintech innovation and growth”.
The government has accepted the timeframe proposed by the Farrell report (i.e. the open banking review), which was also endorsed by Fintech Australia, to introduce the first phase of the open banking reform within 12 months of a government decision.
This means customers of the big four banks will be able to use this reform to pass on their transaction, deposit and debit and credit card data to other accredited financial services providers by July 2019.