Banks urge caution on naming and shaming
The Parliamentary Committee overviewing the major banks has been cautioned by bank chief executives about moving too far and too quickly in naming and shaming financial planners and others whose conduct has been brought into question.
Responding to draft recommendations contained in the first report of the House of Representatives Standing Committee on Economics, the Commonwealth Bank, ANZ and National Australia Bank (NAB) expressed concern at some of the timeframes being proposed by the committee around Australian Financial Services License (AFSL) holders being required to publicly report regulatory breaches.
The committee recommended five-day timeframes – something which both banks suggested was impractical and would not allow appropriate time for investigation and disclosure to customers.
The banks also urged against the committee’s recommendation that the Australian Securities and Investments Commission (ASIC) should report the nature of the breaches and how they occurred, the names of the senior executives and the consequences for the senior executives.
The Commonwealth Bank response stated: “We believe it could be a breach of natural justice to ‘name and shame’ individuals before taking adequate time to properly investigate the alleged breaches”.
By comparison, the ANZ suggested that, instead, the Government might like to consider inserting a new accountability provision into the Corporations Act, stating: “This provision could recognise the circumstances in which individual executives should suffer personal consequences for serious failures of the AFSL holder to comply with the law”.
However where the committee’s recommendations covered financial planning breaches, the two banks concurred with better annual reporting of the overall quality of the financial advice industry, misconduct and the consequences of misconduct with licensees.
The banks noted, however, that enforcement outcomes were already reported by ASIC and that, generally, all clients were contacted by the banks when an adviser was banned.
The banks also noted that it needed to be recognised that some breaches were minor or inadvertent.
Recommended for you
The central bank has released its decision on the official cash rate following its November monetary policy meeting.
ASIC has cancelled the AFSL of a Melbourne-based managed investment scheme operator over a failure to pay industry levies and meet its statutory audit and financial reporting lodgement obligations.
Melbourne advice firm Hewison Private Wealth has marked four decades of service after making its start in 1985 as a “truly independent advice business” in a largely product-led market.
HLB Mann Judd Perth has announced its acquisition of a WA business advisory firm, growing its presence in the region, along with 10 appointments across the firm’s national network.
