Extend BEAR to planning executives say consumer groups
Key consumer groups are continuing to press for the extension of the Bank Executive Accountability Regime (BEAR) to other sections of the financial services industry including insurance and planning.
The consumer groups are also heavily advocating the inclusion of the Australian Securities and Investments Commission (ASIC) in both implementing and policing the BEAR.
Consumer group CHOICE and the Consumer Action Law Centre have told the Senate Economics Legislation Committee inquiry into the legislation implementing the BEAR regime that as things currently stand the bank executives responsible for many of the financial planning and insurance claims management scandals would not have been picked by the proposed new BEAR arrangements.
Consumer Action Law Centre senior policy officer, Katherine Temple told the committee that under the proposed [BEAR] model, it was unlikely any executive would necessarily face consequences “for the string of scandals that the review of the four major banks, also known as the Coleman report, identified as harmful to consumers and where no executive incurred a penalty”.
“These incidents include poor financial advice at NAB [National Australia Bank], CommInsure's mishandling of life insurance claims, NAB's failure to pay 62,000 wealth management customers the amounts they were owed, CBA's poor administration of hardship support, ANZ's OnePath improperly collecting millions of dollars in fees and ANZ improperly collecting fees from 390,000 accounts that had not been properly disclosed,” she said.
“Executives would be unlikely to face consequences for these scandals under the proposed BEAR regime because prudential regulation of ADIs [banks], as opposed to consumer protect regulation, focuses on risk to the stability of the financial system rather than the fair treatment of individual consumers,” Temple said.
Choice executive, Erin Turner told the committee her organisation believed ASIC needed specific powers to hold senior executives accountable.
“As the committee would know, right now ASIC can take some regulatory action – for instance, where banks have misled or deceived consumers or given inappropriate advice – but it can be very difficult for ASIC to hold senior management personally accountable for breaches,” she said.
“ASIC's powers allow them to disqualify people from managing a corporation and to take action against people engaging in financial services or credit activities, but senior management in banks often falls through the cracks of this regime.”
“For example, a senior manager of a financial advice arm of a bank is unlikely to be managing the corporation, but they're also not going to be providing frontline services to customers. It's why we think it's so essential that this regime is extended so it doesn't just apply to APRA-related issues,” Turner said.
Recommended for you
David Sipina has been sentenced to three years under an intensive correction order for his role in the unlicensed Courtenay House financial services.
As AFSLs endeavour to meet their breach reporting obligations, a legal expert has emphasised why robust documentation will prove fruitful, particularly in the face of potential regulatory investigations.
Betashares has named the top Australian suburbs with the highest spare cash flow, shining a light on where financial advisers could eye out potential clients.
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
