Turnbull Government open to banking Royal Commission extension
COMMONWEALTH Bank advisers charged dead clients for financial advice, the banking royal commission has heard after the federal government indicated it was open to extending the enquiry.
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SOME Commonwealth Bank advisers charged dead clients for financial advice, in one case for a decade, the banking royal commission has heard.
A 2015 document for CBA’s Count Financial business shows examples of advisers charging ongoing service fees after clients had died.
One adviser knew a client had died in 2004, but the adviser service fees were still being charged a decade later, the document shows.
“When asked, he said he didn’t know what to do and he had tried to contact the public trustee and had not heard back,” the document noted.
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The adviser was getting about $65 a month in fees in 2014 and 2015.
Another customer of a different adviser died in 2007 and contact was made with the client’s wife in 2013 but no action was taken, the royal commission heard today.
The commission also heard another CBA advice business, Commonwealth Financial Planning, had complaints from customers about fees for no service for six years before the bank made a formal notification about the problem to the corporate regulator in 2014.
In the past I argued against a Royal Commission into banking. I was wrong. What I have heard is so far is beyond disturbing.
— Barnaby Joyce (@Barnaby_Joyce) April 18, 2018
Those claims came after former deputy prime minister Barnaby Joyce told Sky News the banks appear to have taken government support as a reason to do what they like, amid news Australia’s banks could face more than a year of grilling with the federal government indicating it’s open to extending the Royal Commission after the explosive revelations so far.
Federal Finance Minister Mathias Cormann today said the government would consider extending the $75 million inquiry if Commissioner Kenneth Hayne requested an extension.
It comes after a Commonwealth Bank executive yesterday admitted the bank was a “gold medallist” in ripping off customers who seek financial advice by charging them for services they never receive.
“We will not protect anyone,” Senator Cormann said today.
RELATED: AMP sheds $1 billion amid advice scandal
Prime Minister Malcolm Turnbull and Treasurer Scott Morrison set a deadline of 12 months for the comprehensive inquiry when they launched the Royal Commission in November, declaring it a “regrettable but necessary” move.
The Coalition resisted calls for the inquiry for more than three years but caved to pressure to launch one after a damaging backbench revolt led by Nationals MPs.
The commission is currently required to report back by February 1, 2019.
“We’ve indicated right from the outset that we believe the time allocated is appropriate but if the royal commissioner were to come to the government and say ‘I need more time’, I think you can safely assume the government would accept that request,” Senator Cormann told Sydney radio station 2GB today.
It was the commissioner’s role to request more time, he said.
RELATED: CBA charged for advice never given
Senator Cormann said the government and regulators would act on the Commissioner’s recommendations but he also argued that Australia needed a strong banking sector.
“We’ve got to make sure we don’t throw the baby out with the bathwater,” he said.
“We do have a very stable financial system and it is very important for Australia to have strong and profitable and stable banks.
“But clearly if things were done that were bad, then they’ve got to be identified and they’ve got to be acted on.”
The Commonwealth Bank faces further scrutiny at a hearing in Melbourne today after being dubbed the “gold medallist” of the “fees for no advice” problems across Australia’s biggest financial players.
The issue of customers being charged fees for financial advice they never received has dominated the first three days of the banking royal commission’s second round of hearings, with both CBA and AMP feeling the heat.
The four major banks and Australia’s largest wealth manager AMP have all done it, but CBA admits it would get the gold medal if the regulator handed out “fees for no service” medals.
Commonwealth Bank has refunded $118.5 million to customers over the issue.
That’s more than half the $219 million in total the big four banks and AMP have refunded to more than 310,000 financial advice customers over the past decade.
The commission heard yesterday that between 2007 and 2015, CBA and its financial planning subsidiaries failed to provide annual reviews to more than 30,000 customers.
“You’d be the gold medallist if ASIC was handing out medals for fee for no service,” counsel assisting the commission, Mark Costello, asked Linda Elkins, the executive general manager of CBA division Colonial First State, yesterday.
“Yes,” Ms Elkins said.
Originally published as Turnbull Government open to banking Royal Commission extension
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