FSU blames banks’ culture for poor advice
The Financial Services Union (FSU) has shown concern about “systemic and cultural problems” in the major banks leading to poor financial advice outcomes for customers, following the start of round two of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry hearings yesterday.
The extent to which customers were not prioritised and revenue was sought against both clients’ best interests and legal advice was revealed yesterday as round two, which would focus on financial advice, began with a revealing testimony from AMP.
The Commission was told that some financial advice providers had better systems in place to track incoming revenue than they did to ensure customers had been given the advice they were charged for.
Australian Securities and Investments Commission (ASIC) deputy chair, Peter Kell, said that banks had prioritised charging higher fees and concentrating on short-term profits over engaging in ethical behaviour.
These allegations were similar to the problematic behaviour identified in the first round of hearings, where banks acting against the best interests of customers was also an issue.
FSU national secretary, Julia Angrisano, said that she expected this round of case studies to bring to light similar cultural and systemic problems as were identified in the first round of hearings.
“The only real difference is the cultural and systemic problems in financial advice can have more severe consequences for customers than perhaps was seen in some of the case studies in round one.
“Remuneration structures, increasing pressures to expand revenue outcomes for the business from customers and reduction of support functions and staff to ensure good compliance are universal issues when examining poor outcomes for customers, [and] financial advice is not exempt.”
AUTHOR
Hannah Wootton
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
