The Royal Commission in Misconduct in the Banking, Superannuation and Financial Services Industry has revealed an incredible amount to date.
Announced in November 2017, the Royal Commission has held six rounds of hearings to date.
Throughout this time we have heard repeated evidence of the behaviour of the banks, favouring profit and shareholder interests above that of their customers.
With so much activity occurring in a relatively small window of time, we have prepared the following timeline of how it's played out to date.
30 Nov 2017 Banking Royal Commission Launched
The Government announced the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
1 Dec 2017 Kenneth Hayne appointed to lead royal commission
Kenneth Hayne, a former Justice of the High Court, was appointed by the Turnbull government to conduct the public inquiry.
14 Dec 2017 CBA admits to over 53,000 breaches of Anti-Money Laundering/Counter Terrorism Financing Laws
CBA admitted to countless breaches of Anti-Money Laundering/Counter Terrorism Financing Laws including late filing of threshold transaction reports, failure to properly assess the risks for Intelligent Deposit Machines, failure to monitor transactions on almost 800,000 accounts, and failure to adhere to transaction monitoring requirements.
7 Feb 2018 Productivity Commission publishes draft report on competition in the financial system
The Productivity Commission found that the 'four pillars' policy, instituted by Paul Keating in 1990, has protected the banks from market discipline and management failure. Under the policy, the big four banks are restrained from ever merging together.
13 Mar 2018 Public Hearings Round 1 - Consumer Lending
Round 1 of the public hearings commenced, with topics including residential mortgages, car finance, credit cards and add-on insurance.
14 Mar 2018 Public Hearings Round 1 - Consumer Lending
The Royal Commission heard evidence of NAB's 'introducer' program. Under the program, everyday people such as gym instructors and tailors who were otherwise unaffiliated with NAB would be compensated for successfully recommending NAB home loans. The Commission heard evidence that one single introducer was paid $488,000 in commissions over the course of four years.
14 Mar 2018 ACCC Intermim Report from Residential Mortgage Inquiry
The ACCC found that the big four banks had avoided competition for market share, instead choosing to maintain mutually beneficial interest rates.
15 Mar 2018 Public Hearings Round 1 - Consumer Lending
Mortgage brokers at CBA are revealed to have been positioned in a rampant conflict of interests. The Commission heard evidence that the larger a client's loan and the longer they took to repay it, the more commissions the broker would receive. CBA's executive general manager of home buying, Daniel Huggins, admitted that there was indeed a conflict between the interests of brokers and clients.
16 Apr 2018 Public Hearings Round 2 - Financial Advice
Round 2 of the public hearings commenced. Topics included fees for no service, inappropriate financial advice and improper conduct by financial advisers.
17 Apr 2018 Public Hearings Round 2 - Financial Advice
The Commission heard evidence from AMP that it had charged customers fees for services that had never been delivered and that it had then attempted to cover up the intentional nature of the misconduct. The Commission heard that AMP chairwoman Catherine Brenner had requested modifications to an independent report through the inclusion of a statement to the effect that chief executive Craig Meller was unaware of the practice. The Commission also heard that even after AMP had started compensating customers, staff had been briefed to explain that the compensation was for an administrative error rather than intentional misconduct.
19 Apr 2018 Public Hearings Round 2 - Financial Advice
The Commission heard evidence that a CBA adviser was aware of a client's death but continued to charge adviser service fees for 10 years.
20 Apr 2018 AMP Chief Executive Resigns
AMP's CEO Craig Meller resigned over revelations that AMP had lied to ASIC about charging customers fees for no service. Meller's resignation was shortly followed by the resignation of chairwoman Catherine Brenner and group general counsel Brian Salter.
21 May 2018 Public Hearings Round 3 - Loans to Small and Medium Enterprises
Round 3 of the public hearings commenced. Topics included reasonable lending to small businesses and the enforcement and management of small business loans.
29 May 2018 Productivity Commission publishes draft report on efficiency and competition in Superannuation
The Productivity Commission investigated the efficiency and competitiveness of Australia's superannuation system. The Commisison made a number of findings, including that:
- Removing unintended multiple accounts and entrenched underperforming funds would benefit members by $3.9billion per annum. For a new job entrant, this would likely increase their retiring balance by $407,000.
- Approximately 10 million superannuation accounts are unintended multiple accounts, costing members $2.6 billion per annum in unnecessary fees and insurance.
- Being defaulted into an underperforming fund would cost a member 36% of their super balance by retirement compared to if they had been defaulted into a high-performing fund.
- There is a clear inverse relationship between superannuation fees and members' returns (i.e. the more fees members pay, the lower their net returns will be).
4 Jun 2018 CBA settles anti-money laundering case for $700m
CBA agreed to pay a fine of $700m to settle countless breaches of Anti-Money Laundering/Counter Terrorism Financing laws.
25 Jun 2018 Public Hearings Round 4 - Experiences with financial services entities in regional and remote communiteis
Round 4 of the public hearings commenced. Topics included farming finance and interactions between indigenous persons and financial services entities.
27 Jun 2018 Public Hearings Round 4 - Experiences with financial services entities in regional and remote communities
The Royal Commission heard of a Victorian farming family in financial difficulty, given six weeks by ANZ to sell their properties. ANZ admitted that it forced the family to sell their homes, even though including their homes in the sale of the farming land might actually decrease the value of the deal.
6 Aug 2018 Public Hearings Round 5 - Superannuation
Round 5 of the public hearings commenced. Topics included the duties of superannuation funds and the effectiveness of superannuation regulators.
14 Aug 2018 Public Hearings Round 5 - Superannuation
Colonial First State admitted that it committed over 15,000 offences by failing to move eligible accounts into the MySuper platform before the deadline. Colonial claimed that it was unaware that the members were eligible for the low-cost MySuper platform. In failing to transfer the accounts, Colonial continued to collect higher fees than if the members' accounts had been properly transferred.
17 Aug 2018 Public Hearings Round 5 - Superannuation
Counsel Assisting highlighted ASIC's failure to bring civil proceedings in relation to the 'fees for no service' scandal.
"So far no proceedings have been commenced in relation to the fees for no service project?"
"We've had enforceable undertakings, bannings, and the license condition. I would expect that there is a very high likelihood of proceedings commencing in the near future"
17 Aug 2018 Public Hearings Round 5 - Superannuation
Banking regulator APRA admitted that since 2008, it had only applied to the court once for a disqualification order.
18 Aug 2018 Public Hearings Round 5 - Superannuation
The Royal Commission heard evidence that AMP Super Ltd delegates its functions to other companies in the AMP Group, with the administration and operation of the trust handed over to AMP Life Ltd.
As part of this arrangement, AMP Life provides no explanation or identification for what fees it charges in its management of the AMP Super super funds. AMP Super paid out money to AMP Life without any documented arrangement. AMP Super Chairman and Trustee of member's funds Richard Allert admitted that he did not receive any information about how much money AMP Life is taking out of the AMP Super funds.
Mr Allert accepted that AMP Super was effectively forced to accept whatever fees charged by AMP Life, even if they were uncompetitive, as AMP Super would not move its investments out of AMP Life.
18 Aug 2018 Public Hearings Round 5 - Superannuation
The Royal Commission heard evidence of members of AMP Super invested in cash who received a net negative return on their investment after the impact of fees. For example, one member of AMP Super invested 100% in cash achieved a return on their investment of $1,537.93, and was charged investment fees of $786.22 and administration fees of $1,202.83, resulting in a net loss of $451.12. Meaning members were not making money, but were actually becoming poorer.
Counsel Assisting suggested that AMP were providing uncompetitive returns on cash and charging excessive management fees.
When asked how a client who had put their retirement savings with AMP Super invested 100% in cash could end up with a substantially lower return than if they had their retirement savings in an interest bearing account with AMP Bank, Mr Allert responded "you would have to ask the client.. why they do that."
10 Sep 2018 Public Hearings Round 6 - Insurance
Round 6 of the public hearings commenced. Topics included life insurance, general insurance and the regulatory regime.
10 Sep 2018 Public Hearings Round 6 - Insurance
ClearView admitted that it committed criminal offences by making over 300,000 cold calls selling life insurance over a three year period.
11 Sep 2018 Public Hearings Round 6 - Insurance
The Commission heard evidence that Freedom Insurance sold accidental death insurance and funeral cover over the phone to a man with Down syndrome. Internal communications heard by the Commission ridiculed the complaint by the man's father.
11 Sep 2018 Slater and Gordon launches 'Get Your Super Back' campaign
Slater and Gordon announced that it will be launching class actions against the bank-owned superannuation funds following revelations in the Royal Commission that trustees of these superannuation funds had been failing to secure the best interest rates for customers' cash investments and prioritising the interests of shareholders over the interests of superannuation members.
Slater and Gordon estimated that over 5 million Australians could be affected, and that the banks' gouging of superannuation members could amount to over $1 billion.
10 Oct 2018 Slater and Gordon files class action against CFS
Slater and Gordon filed the first class action of the Get Your Super Back campaign against Colonial First State in the Federal Court of Australia. Slater and Gordon alleges that Colonial has breached its duty to members by offering a number of investment options that invest members' cash with CBA and provide returns well below the available market rate, causing loss to members invested in these options whilst benefiting CFS shareholders.
Want to know more?
If you'd like to understand more about the Royal Commission we have also prepared this article which helps you get your head around the Royal Commission in three minutes by taking a look at what's happened to date, and where things are likely to head.
You can also read more or register for the Get Your Super Back campaign here.
The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.
