Less than four years ago, on July 15, 2014, the model of “vertically integrated wealth management” created by our major financial institutions was triumphant.

Finance Minister Mathias Cormann had engineered a Senate triumph, talking around Clive Palmer to support his repeal of the Labor-era Future of Financial Advice (FOFA) reforms.

The big banks and AMP hated FOFA, because it directly undermined their vertically integrated model in which financial planners were paid commissions for steering customers into their wealth management products. The Liberals had delivered: commissions would be restored for financial planners and the vertically integrated wealth industry, which the big banks had begun getting into in the 1990s, starting with David Murray at the Commonwealth Bank, would be safe.

Now it’s a smoking ruin. 

First, Labor’s Sam Dastyari exploited the fact that the Abbott government had tried to be clever and repeal much of FOFA via regulation. Dastyari kept trying to build the Senate numbers to disallow the regulations, and in November 2014, in what will be Dastyari’s lasting legacy in his short public life, he exploited the falling out between Clive Palmer and Jacqui Lambie and brought Ricky Muir on board to kill the repeal.

That was the de jure death of conflicted remuneration. David Murray in his financial services review skirted the whole issue of the conflict of interest at the heart of vertical integration. But the de facto death of the model was already playing out as a result of Adele Ferguson’s reporting of the debacle of the Commonwealth’s wealth management arm, Commonwealth Financial Planning (CFP), and a Senate inquiry into the Australian Securities and Investments Commission (ASIC). Labor’s Mark Bishop and Nats Senator John Williams, leading the inquiry, focused on ASIC’s shocking mishandling of the CFP case. The reputational damage inflicted on the Commonwealth Bank and ASIC was profound.

Independent financial planners knew it — the Financial Planning Association (FPA), which backed repeal, had urged the government to keep the FOFA ban on commissions, saying “it is undeniable that conflicted remuneration has eroded public confidence in our financial system”.

That erosion of confidence, coupled with a myriad of other banking scandals, and increasing calls for a banking royal commission, made the vertically integrated model less and less appealing for banks at a time when the prudential regulator was demanding they boost their capital buffers.

In 2015, Westpac sold a chunk of its wealth management arm. At the end of 2016, ANZ announced it was getting out altogether. The banks also started selling their life insurance arms — another area rife with scandals and conflicted remuneration.

And whatever was left standing of the vertical integration model went up in flames at the banking royal commission yesterday. Counsel assisting provided evidence from the Commonwealth, NAB, Westpac and AMP that remuneration outlawed under FOFA had continued to be paid.

ASIC’s Peter Kell explained how vertical integration was inherently conflicted, that the majority of advice from bank-owned financial planners was not in clients’ best interests and ended up steering them into bank products.

Worst of all, an AMP executive was grilled about how AMP continued to charge clients for advice not merely when they weren’t receiving it, but when there was literally no one to give them advice, despite advice from AMP’s lawyers that this was against the law. AMP subsequently lied to ASIC about the circumstances in which it did this. AMP also admitted it had found over 80 advisers who had either engaged in serious misconduct or been found to be incompetent. Another 400-plus had question marks over them.

The executive apologised, though he struggled to identify which exact thing he was apologising for.

None of this is any surprise. Everything that FOFA repeal critics warned about has proven correct. Everything the FPA said was true. The conflicts of interest hurt consumers. The big banks and AMP encouraged planners to direct them into products that weren’t in their interests. They were sold products they couldn’t even use and billed for things they never received. The banks and AMP couldn’t help themselves.

Perhaps they thought, given the ineptitude and lack of interest of ASIC, they could get away with it forever. But Nemesis is here. It was AMP’s turn yesterday. Later today it will be the CBA’s turn. The others will get theirs. How far we’ve come since that winter day in 2014.