Quotes of the Week

“There are some people who seem to find it a very funny circumstance that last week, in full daylight, and in a main street of Cooktown, two black troopers, with their clothes in the same condition as those of a clumsy butcher’s apprentice, fresh from the shambles, exhibited a naked black girl, not twelve years old, as their newly caught prize. This young slave, taken by force . . . has since been transferred, either for payment or as a gift, to a citizen in this town, whose property she has now become. What were the circumstances that attended, or immediately followed, her capture we do not know, nor do we very much care to inquire ...”  [ Journalist & author Carl Feilberg writing in the Cooktown Courier in January 1877 ]


“Adding a new level of fear and uncertainty onto that with the findings coming out of a royal commission is going to harm the community as well as the industry,”  [CEO Clarence Village Ltd Duncan McKimm acting as an apologist for the aged care industry in The Daily Examiner ahead of the Royal Commission into Aged Care Quality and Safety]

Aged Care in Australia 2018: why government and the aged care industry make one want to weep in frustration

"The true measure of any society can be found in how it treats its most vulnerable members." [Attributed to Mahatma Ghandhi]

A little over five months ago the ABC program "4 Corners" asked people to contact its office to talk about their experience of the aged care system as staff, client or family member of an older person. 

Over four thousand Australians responded and the "Who Cares?" episode was produced and then aired on national television on 17 September 2018.

The day before this episode was scheduled for viewing Prime Minister and Liberal MP for Cook Scott Morrison made a rush announcement of a Royal Commission into Aged Care Quality and Safety - no terms of reference and no start date specified.

This royal commission if it goes forward this year will be the 21st review of the aged care system since 1997 - that's 21 reviews in 21 years.

Twenty-one years in which not one federal or state government has come to grips with the fact that there is a two-tier care system in operation based on the older person's ability to pay.

This plays out almost as apartheid in many aged care facilities, with separate wings in the building/s, separate nursing & other staff, separate meal choices and recreational activities.

It is also twenty-one more years in which older people of limited means have been almost warehoused. Receiving at best what can only be described as benign neglect and at worst extreme abuse.

No-one appears to being asking why so many older people entering residential care die within four years of admission (with death occurring on average around 2.5 years after admission) and why there is such a high percentage of premature deaths.

The incidence of premature and therefore potentially preventable death from the 11 principal external causes identified in a 2016 epidemiological analysis is apparently not going down over time and over the last ten or so years appears to be rising.

For over two decades registered charities, consumer groups and government watchdogs have never truly comes to grips with the basic realities of this two-tier care system.

A system which sees vulnerable older people verbally abused, threatened, physically beaten and deliberately denied appropriate basic care - reports of which can be found in the records of the federal Health Care Complaints Commission, state agencies such as the Nurses and Midwifery Council of New South Wales and in the media.

The day after the "4 Corners" program went to air, one representative of a registered charity which purports to represent older Australians was on national television condemning the types of abuse revealed in this program.

However, in the next breath - and almost in denial of such widespread abuse - he was talking about the need to understand why there was also excellent care in the aged care system and how residential aged care providers which meet or exceed Commonwealth aged care standards need to be rewarded.

He talked about some aged care providers being "world class" until the interviewer brought him back to looking at the ugly truth of the situation.

He was not alone in demonstrating how difficult it is for those associated with aged care to steadily fix their gaze on this seriously flawed system and insist that it be genuinely reformed.

It is hard not to see Scott Morrison's announcement of a royal commission as one meant to pre-empt the "4 Corners" program ahead of the Wentworth by-election on 20 October 2018 - given that the Minister for Senior Australians and Aged Care & Liberal MP for Hasluck Ken Wyatt appeared lukewarm about the need for a royal commission into the aged care system just last month and, in the face of contrary evidence the Prime Minister continues to deny the controversial federal funding cuts to the sector by way a tweak of the Aged Care Funding Instrument to the tune of $1.2 billion in efficiency savings in the 2018-19 Budget.

Financial Services Royal Commission delivers its Round 5 report

The royal commission that Liberal MP for Cook and Australian Prime Minister Scott Morrison, along with the rest of his government, fought so hard to prevent delivers another damning report.....

Financial Review, 24 August 2018:

NAB and Commonwealth Bank have been lashed in a 200-pagedocument published by the Hayne royal commission that details thousands of breaches of the law including the Corporations Act, the Superannuation Industry Supervision (SIS) Act and the ASIC Act – some of which carry criminal penalties.

Counsel assisting the Hayne royal commission Michael Hodge QC has said it is open to the Commissioner to make these findings against the banks in a blockbuster closing statement published just before 7pm on Friday evening.

The two banks are not alone, with open findings also delivered against AMP for breaches of the Corporations Act and the SIS Act, against IOOF for breaches of the ASIC Act and the SIS Act, against Suncorp for breaches of the Corporations Act, the ASIC Act and the SIS Act, and against ANZ for breaches of the Corporations Act.

Open findings of law breaches have also been delivered in relation to case studies that were not heard in public with Westpac and AON Hewitt sized up for breaches of the Corporations Act.

NAB and Commonwealth Bank have been singled out, however, for repeated and systemic breaches of laws which included NAB's inability to notify ASIC of breaches of licence conditions under Sections 912D of the Corporations Act and CBA's 13,000-fold breach of the SIS Act.

NAB came in for a spectacular serve from counsel assisting the Hayne royal commission, who described the bank's negotiations with ASIC over the fees for no service scandal as "ethically unsound" as it tried to substitute services it promised to provide with services it did provide.

Mr Hodge also said the bank was engaged in unconscionable conduct over the charging of fees and its attempts to weasel out of repayments despite knowing the "fee should never have been charged to members and was not adequately disclosed".

NAB chief customer offer Andrew Hagger was singled out for his dealings with the regulator over the fees for no service scandal which counsel assisting said revealed "disrespect for the role of the regulator and a disregard for the gravity of the events".

Counsel assisting submitted that "no reasonable person would believe that NAB's communications with ASIC" over the matter that would see NAB on the hook for almost $90 millin in refunds were "open and transparent" - despite the bank's attempts to characterise its actions as just that.

In addition, the systems and controls the bank had to monitor the provision of advice were either not adequate, non-existent or ineffective according to the savage take-down……

Much of the bank's offending related to its inability to move more than 13,000 super fund members to low-fee MySuper accounts after January 1, 2014 - leaving them in higher-fee paying accounts instead. The bank's communications with members about the issue was described as misleading by counsel assisting, with the bank's witness accepting the description during the hearings.

CBA's platform operator Aventeos also was the subject of open findings for the charging of dead customers for financial advice, a practice counsel assisting said was in breach of Section 52 of the SIS Act.

The lengthy document will add even more fuel to the fire that has singed the for profit super sector following revelations they have charged customers more than $1 billion in fees they have never provided, including to dead customers, and then lied to regulators about it.

The prospect of criminal charges was first raised by Commissioner Hayne himself when he asked NAB's superannuation trustee Nicole Smith "Did you think yourself taking the money to which there as no entitlement raised a question of criminal law?"

Diversified financial services company AMP - which was excoriated for its dealings with the regulator in the second round of hearings - was exposed for an arrangement that saw its superannuation trustee contracting out services it was meant to undertake to other arms of the business.

During the hearings it was revealed the arrangement, which oversaw $100 billion in retirement savings spread over the accounts of 2.5 million members, meant AMP's trustee was unable to lookout for its members by stopping AMP from gouging account holders or looking for another service provider….

Read the full article here.

Now customers can't even trust their local bank tellers

It seems schoolchildren are considered fair game by the big banks......

Junkee, 19 May 2018:

Oh boy. This is a tough one. An investigate report by Fairfax Media has found that Commonwealth Bank employees set up thousands of fraudulent children’s savings accounts in order to meet internal targets and earn bonuses.

That’s right folks. Your mates the Dollarmites? They were in it up to their neck.

According to the report by Fairfax reporter Adele Ferguson, the scam involved employees illegitimately activating Youthsaver accounts that had been set up by parents via the Commonwealth Bank’s school banking program (better known at Dollarmites) but did not contain any actual money. Since the sign-up would not count towards internal sales targets unless a deposit was made in the first 30 days, employees would deposit a small amount of money into the account themselves to ensure that it was counted.

The matter first came to the attention of senior management at the bank in 2013. An internal investigation found that at 150 branches, as many as 5347 Youthsaver accounts contained less than $1 in deposits. According to the Fairfax report, “managers were asked to look into them to see if they had been fraudulently set up using illegitimate sources of funds”, but the bank chose not to broaden the investigation to include the almost 900 other branches that were in operation at the time.

Ultimately, no disciplinary action was taken against employees. In an email obtained by Fairfax, one senior manager said “the issue is widespread, it would seem unfair to name a handful when more are involved”.

The bank did not inform any of the customers or schools involved.

The Sydney Morning Herald, 18 May 2018:

The school banking and customer referral scandals came to light inside the bank shortly after CBA's now chief executive, Matt Comyn, was appointed to run the retail operation in 2012….

“While this practice did not financially harm any of our customers, it was a breach of their trust. For that I’m deeply sorry. As CBA’s new chief executive, my number one priority is to expedite changes that will prevent any behaviour that undermines our customers' trust in us – and to remove any CBA employee who knowingly acts against our customers’ interests.”

The country’s largest consumer group, CHOICE, seized on the scandal to renew its calls to ban school banking schemes.

“It's a pretty basic expectation that bank staff will handle money honestly. Whether it involves five cents or $5 million, any mishandling of funds goes to the heart of trust in the institution,” CHOICE chief executive Alan Kirkland said.

He said if senior staff knew it was happening on a mass scale and did nothing about it, they were complicit in that fraud.

 “This raises serious questions about the culture of the entire bank,” he said

While over at the Banking and Finance Royal Commission………

ABC News, 21 May 2018:

The banking royal commission has heard an elderly, seriously ill woman faced homelessness after her daughter's business failed.

Carolyn Flanagan cannot read or write due to blindness caused by glaucoma, she has trouble speaking due to the effects of cancer surgery, suffers memory loss and has osteoporosis, among other medical problems.

The pensioner sought help from Legal Aid NSW when Westpac tried to take her home, which was used to guarantee her daughter's loan. A complaint was taken to the Financial Ombudsman Service, which found in Westpac's favour.

It was only a last-ditch effort by Ms Flanagan's Legal Aid lawyers that managed to keep her in her home.

Solicitor Dana Beiglari told the hearing her manager at the time "contacted another consumer advocate to see if he had a senior contact at Westpac who we could escalate this matter to, given our client was facing homelessness in her old age".

Ms Beiglari sent a letter to Westpac outlining Ms Flanagan's medical circumstances and managed to secure a "life interest" in the property for her, which means she can remain in the home until she dies or decides to sell.

Counsel assisting the inquiry Michael Hodge QC asked Ms Beiglari about the Westpac employee's response to the case.

"What that employee of Westpac expressed to you was surprise with the thought that Westpac would be evicting and it wasn't in line with what Westpac would normally do?" he asked.

"Yes, that's correct," Ms Beiglari answered.

Ms Flanagan maintained a sense of humour under questioning. After Mr Hodge listed off her litany of health issues, including depression, she quipped "that'd depress anybody".

She gave her evidence through a video link as she was too unwell to travel. 

Westpac's lawyers questioned her recollection of events and the amount of the loan.

Westpac executive Alastair Welsh followed Ms Flanagan and Ms Beiglari in giving evidence. He said there was nothing "technically" wrong with Ms Flanagan being allowed to act as a guarantor.

"My review of the file shows we followed the process I would want the bank to follow," Mr Welsh said.

However, he admitted there were some problems with the bank's handling of the case once the loan failed.

The inquiry heard it was Westpac policy to "exercise extreme caution" with parental guarantees.

Mr Welsh admitted there were warning signs in Ms Flanagan's case that should have been observed by the banker.

"She suffers from quite debilitating health conditions. Would that be a relevant factor?" Mr Hodge asked.

Mr Welsh agreed and said there were no comments on Ms Flanagan's file noting her condition.

The bank manager involved is no longer employed by Westpac.

Once a banker always a a banker

People need to know why Malcolm's on the side of the cheating banks.

Here are the ads we're running on TV. It's not good enough that Turnbull spends all his time defending and supporting the big end of town and treats working people like trash. #auspol #banksrc pic.twitter.com/lHDatAo27Y

— ETU⚡️VIC (@ETUVIC) May 13, 2018

via @ETUVIC

There are currently fifteen [15] members of the Turnbull Government who formerly worked in the banking, finance, insurance, and/or for-profit superannuation industries and three [3] who worked for large accountancy firmss or lobbying groups.

Quotes of the Week

“Meeting the narrow test of legality is not a licence to be a bastard”  [Journalist Peter Hartcher writing  about corporations in The Canberra Times, 5 May 2018]

“budget's forecasts and projections, prepared by that well-known Italian economist, Rosie Scenario”  [Economics editor Ross Gittens writing in The Sydney Morning Herald about Federal Budget 2018-19, 8 May 2018]

A guide for those following the Turnbull Government response to evidence given in the Financial Services Rooyal Commission

It won't be long before members of the Turnbull Government - from lowly backbenchers through to cabinet ministers - will be seeking to find excuses to give banks, along with finance and insurance companies, a 'get out of gaol free' card despite whatever findings and recommendations are contained in the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

It almost goes without saying that such big political donors are bound to have some members of the government willing to fight in their corner in order to water down whatever post-royal commission legislative provisions are proposed.

To help with discerning just who might play those games, here is a list of Liberal and Nationals MPs and senators with banking/finance/insurance/superannuation backgrounds or who worked for large accountancy firms.

Altogether they make up 16.98 per cent of the Turnbull Government.
 

AUSTRALIAN HOUSE OF REPRESENTATIVES 45TH PARLIAMENT

Malcolm Turnbull MP (Lib) – former investment banker, Goldman Sachs

Josh Frydenberg MP (Lib) - former director, Deutsche Bank AG 

Kelly O’Dwyer MP (Lib) - former executive, National Australia Bank

Mathias Cormann MP (Lib) – former health services manager & acting general manager, HBF Insurance

Scott Bucholz MP (Lib) - former agri-finance manager

Bert Van Manen MP (Lib) - former bank officer, financial adviser 

Jason Falinski MP (Lib) - former strategy and M&A, Insurance Australia Group

Steven Ciobo MP (Lib) - former senior associate, Australasian Institute of Banking and Finance

John McVeigh MP (Lib) – former graduate executive trainee, Bank of Queensland

Barnaby Joyce MP (Nat) - former rural banker

Kevin  Hogan MP (Nat) -  former money market and bond trader, State Bank of NSW/Colonial State Bank & former Investment officer, Australian Catholic Superannuation Fund, former superannuation consultant 

Michelle Landry MP (Nat) - former supervisor, National Australia Bank

David Littleproud MP (Nat) – former banking and finance roles

AUSTRALIAN SENATE 45TH PARLIAMENT

Jane Hume SEN (Lib) - former investment research manager NAFM/ NAB, private banker NAB, senior manager, Rothschild Australia, vice president Deutsche Bank

Arthur Sinodinos SEN (Lib) - former banker

Dean Smith SEN (Lib) - former head insurance strategy, IAG

OTHER MEMBERS OF TURNBULL GOVERNMENT WHO FORMERLY WORKED FOR LARGE ACCOUNTANCY FIRMS/FINANCIAL INDUSTRY GROUPS

Ian Goodenough MP (Lib) - former accountant and senior associate, Financial Services Institute of Australasia

Michael Sukkar MP (Lib) – former senior consultant, PricewaterhouseCoopers

Matt Canavan SEN (Nat) – former senior executive, KPMG 

Note: Employment descriptions are ones that have been used by MPs & Senators themselves as of 28/04/18

As the federal govenment burns are Turnbull and Co. just tinkering at the edges of banking and finance regulations or are they seriously committed to reform?

Way back in October 2016 the Australian Securities and Investments Commission (ASIC) began an Enforcement Review which examined the adequacy of legislation dealing with corporations, financial services, credit and insurance, with regard to serious contraventions in the financial sector, including fraud and criminal activity.

0n 18 December 2017 ASIC handed its Enforcement Review Report to the Turnbull Government.

It was probably no accident that four days earlier the same government ceased its sustained opposition to a highest level inquiry and created the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

With the extent of bank money laundering becoming an issue and the review report on its doorstep there was nowhere else to turn, given the average voter would not have been receptive to the argument that the big banks were historically a protected species because of their generous political donations.

In April 2018 in the midst Royal Commission revelations concerning a host of bank and financial system abuses the Turnbull Government finally released its response to the ASIC review report.

This response "agrees" with or gives "in principle agreement" to all 50 recommendations but has placed 20 recommendations on the backburner.

Knowing that ASIC’s investigative abilities has been crippled by funding/staff cuts, that entities with annual profits in the billions just seem to shrug off large corporate fines, often indemnify executives in relation to individual fines and are able to play the legal system so that executives rarely see the inside of a prison, on 20 April the Turnbull Government via the Minister for Revenue and Financial Services revealed that by legislative amendments it will implement the potential for larger individual and corporate fines and double potential maximum prison sentences:

The Turnbull Government is strengthening criminal and civil penalties for corporate misconduct and boosting the powers of the Australian Securities and Investments Commission (ASIC) to protect Australian consumers from corporate and financial misconduct.

These stronger new penalties will ensure that those who do the wrong thing will receive appropriate punishment.

These reforms represent the most significant increases to the maximum civil penalties, in some instances, in more than twenty years. They bring Australia's penalties into closer alignment with leading international jurisdictions, and ensure our penalties are a credible deterrent to unacceptable misconduct.

The Government will increase and harmonise penalties for the most serious criminal offences under the Corporations Act to a maximum of:

For individuals: (i) 10 years' imprisonment; and/or (ii) the larger of $945,000 OR three times the benefits;

For corporations: (i) the larger of $9.45 million OR (ii) three times benefits OR 10% of annual turnover.

The Government will expand the range of contraventions subject to civil penalties, and also increase the maximum civil penalty amounts that can be imposed by courts, to the maximum of:

the greater of $1.05 million (for individuals, from $200,000) and $10.5 million (for corporations, from $1 million); or

three times the benefit gained or loss avoided; or

10% of the annual turnover (for corporations).

In addition, ASIC will be able to seek additional remedies to strip wrongdoers of profits illegally obtained, or losses avoided from contraventions resulting in civil penalty proceedings.

ASIC's powers will also be significantly increased through:

expanding their ability to ban individuals from performing any role in a financial services company where they are found to be unfit, improper, or incompetent;

strengthening their power to refuse, revoke or cancel financial services and credit licences where the licensee is not fit or proper; and

boosting ASIC's tools to investigate and prosecute serious offences by harmonising their search warrant powers to provide them with greater flexibility to use seized materials, and granting ASIC access to telecommunications intercept material.

The Turnbull Government is committed to ensuring ASIC is armed with greater powers to effectively deter, prosecute, and punish those who do the wrong thing, to improve community confidence and outcomes for consumers and investors in the financial services and corporate sector.

These reforms come on top of strong Government action to reform our financial services sector to better protect Australian consumers over a number of years.

The Government has already provided $127 million in additional funding to ASIC to bolster its investigative and surveillance capabilities; implemented an industry funding model for ASIC to give it secure funding; appointed a new chairman for ASIC, Mr James Shipton, and announced a new second Deputy Commissioner with an enforcement focus, Mr Daniel Crennan QC; established a new standards setting body for financial advisers; and established a new one stop shop for consumer complaints which is free for consumers, binding on financial institutions and can order compensation where appropriate.

Today's reforms to ASIC's powers and penalties follow recommendations made by the ASIC Enforcement Review Taskforce (The Taskforce). The Taskforce was established in October 2016 to fulfil the Government's commitment to review the adequacy of ASIC's enforcement regime in response to the Murray Financial System Inquiry, and provided its report to Government in December 2017.

The Government has agreed, or agreed in principle, to all 50 of the Taskforce recommendations and will prioritise the implementation of 30 of the recommendations.

The remaining 20 recommendations relate to self-reporting of breaches, industry codes and ASIC's directions powers, which will be considered alongside the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The Government thanks all the members of the Taskforce, including the Panel of Experts, Treasury, ASIC, Attorney-General's Department, Commonwealth Director of Public Prosecutions, as well as all stakeholders who participated in the consultation of the various position papers put forward by the Taskforce.

The Government's full response to the Taskforce Report can be found on the Treasury website.

Turnbull Government will ignore this call to extend Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry at its own electoral peril

Remember When Australian Prime Minister and former merchant banker Malcolm Bligh Turnbull ruled out a bankig royal commission?

Telling the nation; "I can tell you wehave as a government decided not to have a royal commission, we made thedecision a long time ago, not because we don't believe there is nothing goingon in terms of problems with the banks, it is because we want to take actionright now and we are".

Recall the time and other limits placed on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry when it was finally established on 14 December 2017? Giving it the power to ignore anything that it wanted to that would otherwise be within its scope. 

Well things did not go entirely to plan for Malcolm and his banker mates.

Because since13 March 2018 the curtain has been drawn back revealing the systemic unethical, deceitful, rapacious, sometimes fraudulent and, in certain instances criminal behaviour, of the financial sector.

National Australia Bank, Westpac, St George, Citibank, ANZ, AMP Insurance and the Commonwealth Bank of Australia, along with their financial services spin-offs, had all come under some degree of scrutiny by mid-April with more hearings still sheduled.

So it comes as no surprise that Fairfax Media is now saying what many are thinking.............

The Age, 18 November 2018:

Evidence to the fledgling financial services royal commission confirms the inquiry, long-resisted by the Coalition government and the banks, was justified and suggests it will lead to rigorous reforms. It also suggests the government’s decision to limit the probe to one year should be reviewed.

A damning admission by a top executive of what was once one of the nation’s most trusted institutions, AMP, about his company repeatedly lying to the corporate regulator about condoned client fraud intensifies concerns about one of the most crucial industries.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is only in its third week, but there has been a plethora of testimony to unethical and/or illegal practices including: charging clients for wilfully undelivered services; fraud; manipulating ‘‘independent’’ audit information; selling clients irrelevant insurance and financial products (many of them in-house); failing to declare commissions; refusing to honour insurance contracts; rigging interest rate markets; and failing to make proper checks before granting loans.

The banks long argued the malfeasance was the result of ‘‘a few bad apples’’, a position that became untenable as bountiful evidence, much of it revealed by The Age, implicated the companies’ very culture.....

None of the financial institutions are coming away from this Royal Commission covered in glory

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on 14 December 2017, is due to hand down an interim report no later than 30 September 2018 followed by a final report by 1 February 2019.

As of 13 April 2018 the royal commission has received 3,433 public submissions - 69% of these were Banking, 8% Superannuation 8% and 7% Financial Advice.

Round 2 public hearings finish on 27 April 2018.

View the live webcast or previous hearings.

Yesterday was the Commonwealth Bank of Australia's turn to reluctantly admit systemic fraud ....

The Guardian, 18 April 2018:

Counsel assisting the royal commission, Mark Costello, asked Linda Elkins, from CBA’s wealth management arm Colonial First State, to confirm CBA’s poor record of charging fees for no service.

“It would be the gold medallist if [the corporate regulator] was handing out medals for fees for no service, wouldn’t it?” Costello asked.

Elkins replied: “Yes.”

The commission was told that from July 2007 to June 2015 clients of CBA’s Commonwealth Financial Planning, BW Financial Planning and Count Financial businesses were routinely charged ongoing fees for financial advice where no advice services were provided.

CBA has had to refund $118.5m to customers – more than half the $219m in compensation paid by the big four banks and AMP over the past decade – to more than 310,000 financial advice customers.

ABC News, 18 April 2018:

Michael Hodge QC observes that Commonwealth Financial Planning has had a 100 per cent increase in clients over the past decade but a 25 per cent drop in the number of advisers.

He asks CBA's Marianne Perkovic whether the bank had any concerns that clients were not receiving adequate attention because of the decline in advisers, while client numbers doubled.

This is in the context of ASIC's concern that some firms were taking on too many clients for the number of planners. 

Ms Perkovic struggles to provide a clear answer.......

After disputing the meaning to be attributed to internal memos between the bank's senior managers in early 2012, Ms Perkovic eventually had to admit that a Deloitte report handed to CBA in July 2012 revealed systemic problems in ensuring that customers weren't being charged for financial advice they did not receive.

Deloitte had found that at least $700,000 in ongoing service fees were being charged to more than 1,050 clients that were allocated to more than 50 inactive financial planners who had left the business before 2012.

It appears that Ms Perkovic was finally ground down by relentless questioning from Michael Hodge QC, warnings from Commissioner Kenneth Hayne and the irrefutable evidence of the Deloitte report.

Big banks get hammered in first round of Banking Royal Commission hearings

I am sure that the Turnbull Coalition Government was hoping that voters would not form opinions such as this when it set up the deliberately ‘hobbled’ Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

O’Brien Solicitors, blog post, 5 April 2018:

First Round of Banking Royal Commission Reveals Systemic Issues in the Banking Industry

Customers are falling victim to the misconduct of banks with evidence being presented at the Banking Royal Commission (BRC) of fraudulent conduct, approval of inappropriate loans and excessive interest rates. The first round of public hearings have finished with the big four banks (NAB, Westpac, ANZ and CBA) being scrutinised by the Commission over its inappropriate behaviour.

The big banks get hammered in first round of BRC hearings

NAB’s employee incentive scheme saw fraudulent conduct by its bankers making unsuitable loans, the dishonest use of customer signatures, and false documentation being provided to support loan applications. Even worse, staff in some branches accepted bribes to facilitate loans they knew were based on fraudulent documents. Whistleblowers called out the fraud, but the bank did not notify the regulator until months after they were required to.

The Commonwealth Bank of Australia has also been criticised for its brokers fees and commissions for home loans and associated CBA insurance products that customers purchased. Brokers failed to clearly disclose upfront, on-going fees and incentives to stop people paying off their mortgages sooner. CBA was also under fire after they admitted to waiting two years before reporting a problem with their personal loan insurance program that affected over 20,000 customers.

ANZ have also been scrutinised with the bank failing to check customers’ expenses before approving them for a home loan. Their car finance business, Esanda, was also found to have been undertaking dodgy practices before it was sold in October 2015. This included the inappropriate use of customer’s financial information and increasing interest rates for better commissions.

It was found that Westpac also had its own dodgy practices. Similar to the other banks, the commissions attached to Westpac employees’ approval of car loans has caused issues of inappropriate loans being made. It has also been found that the bank increased credit card limits without checking customer’s current employment status.

Systemic change required in the banking industry

It is clear that there is a lack of accountability mechanisms and internal controls to manage potential conflicts of interest and the detection of fraud within banks. Commission based incentive programs have resulted in the approval of inappropriate loans and fraudulent conduct. Customers are falling victim to greedy banks with higher interest rates and the misuse of their personal information. It is only now that the banks have been caught out that they are apologetic and pledging to change their practices. It is unacceptable that this has been occurring on a consistent basis throughout all banks, and requires a systemic change to be made in the banking industry.

The findings during the Banking Royal Commission’s first hearing indicate two key things. Firstly, commissions and employee incentives are a key contributor to misconduct. This needs to be regulated in some way. Customers should enquire about commissions and any associated fees before purchasing any banking services. Secondly, the industry regulator ASIC needs to implement proactive measures to monitor the practices of financial institutions. Many of the reported cases of misconduct were only made aware to the regulator years after, or even swept completely under the rug. They need to be prevented from occurring in the first place.

While this from the Australian Transactions Reports & Analysis Centre (AUSTRAC) CEO Nicole Rose via ABC News on 5 April 2018 would have been as welcome as seven day old fish heads in the prime ministerial letter box:

Australia's financial intelligence czar Nicole Rose says she is shocked at the depth of money laundering in the economy involving organised crime, child exploitation and drug importation.

"I thought coming from the Australian Criminal Intelligence Commission that I had a pretty good handle on serious and organised crime," she told the ABC's AM program.

"I didn't appreciate the depth and breadth of involvement with private entities and banks. I didn't appreciate how many industries it does actually touch.

"There's a misperception that money laundering is a victimless white collar crime that's probably just looking at tax avoidance.

"It has a massive impact on everyday life whether that's child exploitation, serious and organised crime or drug importation. It all involves money laundering." [my yellow highlighting]

In December 2017 AUSTRAC filed a further 100 alleged contraventions against the Commonwealth Bank amending the statement of claim in the current civil penalty proceedings:

AUSTRAC CEO, Nicole Rose PSM, said that the additional alleged contraventions were identified after the civil penalty proceedings were instituted through AUSTRAC’s ongoing investigation into CBA.

‘These allegations are very serious and reflect systemic non-compliance over approximately six years’, Ms Rose said.

AUSTRAC now alleges over 53,800 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. 

Financial Review, 9 April 2018:

The financial intelligence regulator AUSTRAC has stolen the spotlight from Commonwealth Bank CEO Matt Comyn on his first day in the top job with allegations that the bank broke the law by knowingly opening transaction accounts for customers it had reasons to suspect of money laundering.

Among the transactions AUSTRAC says the bank ought to have known, or at least suspected, were not legitimate was $250,000 deposited by an Iranian salesman and a second unemployed customer and a $150,000 deposit made through a Russian Bank from company located in a known tax haven.

AUSTRAC's reply yesterday to CBA's defence of the money laundering allegations made it difficult for Mr Comyn to clear the air as he promised the bank would be more accountable and more transparent under his leadership…..

"We have been too slow to fix mistakes and we have failed to meet some important regulatory and compliance obligations. This is unacceptable," Mr Comyn said in a reference to the bank's fraught dealings with regulators including AUSTRAC, ASIC and APRA.

By late morning, however, AUSTRAC's new claims showed that the two parties were some way from settling the issue the bank has set aside $375 million to resolve, which relates to the regulator's claims it has repeatedly breached transaction reporting requirements.

"CommBank suspected on reasonable grounds that the opening of CommBank Accounts 78,79, 81, 82 and 84 were 'specifically generated for the purpose of laundering money'," AUSTRAC said yesterday.

"Commbank's failure to give the AUSTRAC CEO an SMR (suspicious matter report) in respect of its suspicion ... constitutes a contravention of Section 41 (2) of the Act."

The five accounts formed part of a group of seven that had $1.7 million deposited in them over four years. Among those to open and make deposits in some of those accounts were money launderers known as Person 66 and Person 67.