Today, the royal commission into banks that we definitely didn’t need continues. So far, what the hearings have revealed has been, as Bernard Keane put it in these pages, “shocking even for veteran finance watchers, in both the scale and the seniority of involvement within major corporations”.
The quantity and quality of the scandals has already become overwhelming, so Crikey has put together a handy top five of the worst we’ve heard so far.*
(Please note: putting together the worst crimes revealed in these proceedings is like putting together the top five Beatles songs; there is such a full, rich and varied palette to paint from, there are bound to be omissions that people will find egregious. We’ll get to your favourite eventually, we promise.)
Dead people being charged for financial advice
Probably the grabbiest of all the headlines was the revelation that CBA customers, in some cases dead for nearly a decade, were still being charged for financial planning advice postmortem. Knowingly, by the way.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
$118 million in services not provided by Commonwealth Bank
The Commonwealth Bank is a self-confessed gold medalist in the rip-off Olympics, and have so far paid back $118 million to customers who were charged for services they did not receive. The commission further heard that CBA and its financial planning subsidiaries failed to provide annual reviews to more than 30,000 customers between 2007 and 2015.
Bribes at NAB
The first of the major bombshells — already receding from our memories like old Trump scandals — was the incredible bribery and forgery ring run across multiple National Australia Bank branches in Western Sydney. NAB’s “Introducer Program”, which provided commissions to people without any financial expertise for home loan referrals, led to forged documents and fake payslips to settle loans, and white envelopes stuffed with cash bribes. The Introducer Program ended up netting NAB $24 billion in loans. That was revealed on day one.
AMP misleads ASIC
The commission has claimed one major scalp so far: Craig Meller, chief executive of financial service company AMP. Meller’s resignation followed a series of damning disclosures of AMP’s conduct. Scores of financial advisers were found to be either engaging in serious misconduct, or just out-and-out incompetent. But most damning of all was the revelation that not only were thousands of customers deliberately charged for services they were never going to receive, but that ASIC had been repeatedly misled about that fact. Head of financial advice Anthony Regan confessed the company had lost count of how many times.
In amongst all the overwhelming numbers and casual deceit have been the heartbreaking smaller stories of individuals ruined by irresponsible financial advice. For example, nurse Jacqueline McDowall told the commission that a Westpac financial planner had advised her and her husband to start a self-managed super fund and that they could borrow up to $2 million to buy a bed and breakfast for their retirement. They sold their house and began renting, before being told that the loan arrangement they had bet their future on would actually be impossible. The language she used when describing the events to the commission — “I was too embarrassed to tell anybody. I felt humiliated, stupid.” — is notably similar to the language of someone who has just been scammed. The couple may well never own a home again.
And groaning under the weight of all that, of course, is all the stuff we already knew about. Money laundering for terrorists, for example. More revelations (and more and more) will follow. Stay tuned for the regrettable but inevitable part two.