Banking royal commission: CBA heads list of Kenneth Hayne’s villains

Australia’s biggest bank, the Commonwealth, is also its dirtiest, racking up a dozen breaches in Kenneth Hayne’s final report.

Australia’s biggest bank, the Commonwealth, is also its dirtiest, racking up a dozen breaches in royal commissioner Kenneth Hayne’s final report.

Mr Hayne made 18 referrals to authorities for further investigation of breaches of the law and noted seven potential crimes, an analysis of the report by The Australian shows.

This is in addition to Mr Hayne’s communications with the corporate watchdog over three criminal dishonesty offences, allegedly committed by institutions he did not name, which he has said should be prosecuted.

AMP came in second on Mr Hayne’s hit list, accumulating nine breaches, while high-pressure insurance sales outfit Freedom, which has had its business model destroyed by the royal commission and yesterday went into a trading halt ahead of an announcement about its future, came third with seven. NAB and Suncorp also featured heavily, with six breaches each.

Mr Hayne identified five new potential crimes committed by banks and super funds, in addition to two that are under investigation in inquiries sparked by his hearings.

CBA’s breaches included at least 13,000 counts of failing to move super savers from high-fee accounts into low-fee MySuper accounts, a crime the bank has admitted to the prudential regulator. As The Australian reported last week, despite the admission, the Australian Prudential Regulation Authority made no attempt to prosecute the crimes, failing to prepare a brief of evidence for the Commonwealth Director of Public Prosecutions.

Mr Hayne said CBA subsidiary Avanteos may have committed a crime by failing to report to the corporate regulator it had been charging dead people fees.

It was required by law to report to the corporate regulator within 10 days of becoming aware of the significant licence breach.

 

The commission heard evidence Avanteos charged more than 1700 dead people more than $2.9m in fees. CBA has said it will repay the charges, with interest.

Mr Hayne also referred Allianz to the Australian Securities & Investments Commission for the same crime, saying it failed to report itself to the regulator for making misleading and deceptive statements about insurance products on its website.

Allianz executive Michael Winter “acknowledged the decision not to report this matter to ASIC in May 2016 was the wrong decision,” Mr Hayne said in his final report.

He referred Allianz to ASIC and APRA for the non-criminal breach of having inadequate breach-reporting processes.

Mr Hayne did not refer two instances where a NAB subsidiary allegedly committed the crime of failing to provide superannuation customers with periodic statements to ASIC because the bank dobbed itself in to regulators during the commission’s hearings.

The bank told ASIC and APRA it had charged about 7000 customers more than $1m in “plan service fees” when it should not have.

“The two incidents were both cases where AMP Advice charged or allowed the charging of fees to the trustees’ members in circumstances where they should not have,” Mr Hayne said.

“Yet the trustees were not aware of this and apparently had no way of monitoring the charging of fees to members.”

He said trustees asked for information about the incidents only after they were aired at commission hearings last April.

“This is not a recent revelation to the trustee boards,” he said.

“APRA alerted them to the danger last year but they had not recognised it themselves and did not move swiftly to address it.”

Mr Hayne referred TAL, which is a major player in group insurance sold through superannuation, to ASIC over a laundry list of misconduct towards clients that included spying on them, bullying them and lying to them about policy terms.

In one case, TAL refused a claim for stress-induced depression and anxiety.

The customer complained to the Financial Ombudsman Service, which made a determination in her favour. Despite the ruling, TAL demanded she repay premiums it had previously refunded before it processed the claim, failed to promptly assess the claim and put her under surveillance.