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.
AUTHOR
Hannah Wootton
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
