Royal Commission flags fees and regulatory failings in report
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has highlighted a toxic sales culture and a failure to regulate wrongdoing as major issues in the interim report handed down by Commissioner Kenneth Hayne today.
The report flagged issues with fees charged for little or no service provided as deeply problematic, including questioning how it reached a point where fees were charged to deceased people.
"Too often, the answer seems to be greed - the pursuit of short-term profit at the expense of basic standards of honesty," Hayne wrote in the report. "How else is charging continuing advice fees to the dead to be explained?"
Hayne said that a culture clearly existed where profits were put first and staff performance at every level was based on sales and profit.
The report also suggested that regulators had failed to act sufficiently to sanction wrongdoers.
"When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done," Hayne wrote.
He found that while laws already existed prohibiting much of the problematic behaviour, most especially in requirements that Australian Financial Services Licensees provide services "efficiently, honestly, and fairly", the answer to reform may not lie in extensive regulatory change but rather simplification of laws and better enforcement.
Recommended for you
With the highest number of candidates in a year sitting the latest financial advice exam, a surge of new entrants are expected in the coming weeks, according to Wealth Data.
AMP has launched a range of five diversified index managed portfolios on its North investment platform, targeting a younger client demographic.
An NSW adviser, who advised over 120 clients after falsifying her financial advice exam results, has been permanently banned by ASIC.
ASIC has released the results from the latest financial adviser exam, the first to be run since changes to its structure earlier this year.