Banking royal commission: CBA official agrees it deserves gold medal for charging for advice never given
A COMMONWEALTH Bank executive has admitted the bank would win gold if medals were awarded for ripping off customers by charging for financial advice never given.
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A COMMONWEALTH Bank executive has admitted the bank would win gold if medals were awarded for ripping off customers by charging them fees for financial advice that was never given.
And another executive at the nation’s biggest bank has agreed the bank’s internal systems were so hopeless CBA had no idea what was going on in its own business.
The shock confessions come after Treasurer Scott Morrison warned executives at Australia’s largest wealth manager AMP could face jail time if found guilty of false and misleading conduct.
After AMP’s admissions it misled the corporate regulator over charging financial advice fees to customers for services they did not require, it was the Commonwealth’s turn to be grilled yesterday.
The bank has already refunded $118.5 million to affected customers, which is more than half the $219 million the big four banks and AMP have together paid in compensation to 310,000 financial advice customers charged fees for no service.
Counsel assisting the royal commission Mark Costello asked a CBA executive yesterday if the bank deserved the gold medal for its actions.
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“It would be the gold medallist if ASIC was handing out medals for fees for no service, wouldn’t it,” Mr Costello said.
In reply, the executive general manager of CBA’s wealth management arm Colonial First State, Linda Elkins, said: “Yes.”
Counsel assisting the commission Michael Hodge also asked why after identifying these issues in 2012, it took the bank two years to report them to ASIC in 2014.
“CBA’s systems were so hopeless CBA had no idea what was going on in its business?” he asked.
CBA executive general manager and a director of Commonwealth Private Marianne Perkovic agreed.
On Monday it was revealed that the number of financial advisers in Australia has ballooned 41 per cent over the past nine years to 25,386, with ASIC saying it only has a core team of 60 people to police this growing sector.
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On Tuesday AMP’s head of financial advice Jack Regan confessed that his organisation had been charging clients for advice they never received, while its staff had sent false and misleading statements to ASIC more than 20 times.
Mr Morrison said these revelations were “deeply disturbing” and that ASIC had been investigating the financial institution for some time.
“This type of behaviour can attract penalties which include jail time,” the Treasurer said.