The Most Damning Allegations Of The Banking Royal Commission Explained
And what all the drama and deceit means for the banking bigwigs.
What you need to know
- Criminal charges recommended for AMP and Henderson Maxwell.
- AMP has made 'deliberate' attempts to mislead the corporate regulator ASIC.
- The Big Four all under investigation for breaking the law in numerous ways.
AMP Chairman Catherine Brenner announced her resignation on Monday following two weeks of shocking revelations at the banking royal commission. Just hours later, AMP Group General Counsel Brian Salter announced his as well.
It's all been very dramatic for AMP, but they aren't the only group that's got a lot to answer for following the malpractice and blatant deceit revealed at the commission.
AMP together with NAB, The Commonwealth Bank (CBA), ANZ, Westpac, Colonial First State and financial advice firm Henderson Maxwell have been found to have either mislead the body that manages financial services, ASIC or to have breached the Corporations Act, a federal law.
But, what are these shocking revelations and what do they mean?
Criminal Charges Recommended Against AMP
The royal commission heard evidence AMP mislead the corporate regulator ASIC 20 times, by hiding that they charged customers for financial advice they didn't receive.
This fee-for-no-service scandal breaches four sections of the Corporations Act and carries criminal consequences, as well as a fine of up to $1 million. AMP could also be charged for failing to lodge documents to ASIC, which is also a criminal offence.
AMP is believed to have influenced an independent report by Clayton Utz Partners, where they are say to have approved the findings of the report before it was submitted to the commission.
The consequences for AMP have been catastrophic. Chairman Catherine Brenner and Group General Counsel Brian Salter resigned on Monday, Chief Executive Craig Meller resigned on April 20 and all AMP directors will take a 25 percent pay cut. AMP shares have also dropped dramatically, with over $2 billion sliced off the company's market value in just two weeks.
Henderson Maxwell Also Faces Criminal Charges
'Celebrity' chief executive of Henderson Maxwell, Sam Henderson has also been recommended for criminal charges by the commission after he failed to act in his clients' best interests by offering dodgy financial advice. This could be a breach of the Corporations Act.
In her evidence to the commission, senior public servant Donna McKenna explained how Henderson advised her to cash out her superannuation two years early and move to a self-managed fund, a move that cost her over $500,000.
The Commonwealth Bank Charged Deceased Customers Financial Advice Fees
The Commonwealth Bank will be investigated for charging fees to customers after their deaths and not reporting fees-for-no-service to ASIC.
The commission heard that CBA charged fees to clients after their deaths. The most shocking case saw one customer charged ten years after they passed away.
Commonwealth Financial Planning, a CBA advice business, charged fees-for-no-service for six years before they took the problem to ASIC in 2014.
The commission is also open to investigate CBA's Colonial First State for charging investment fees incorrectly.
The Commissioner To Investigate Big Four Misconduct
NAB, ANZ, The Commonwealth Bank, and Westpac face potential charges over failure to ensure their affiliated financial advisers complied with corporate law.
The royal commission initially set out to investigate home loans, car loans, credit cards, add-on insurance and a range of other issues. It's possible all four banks breached the Corporations Act, through various means.
Westpac : Provided appalling financial advice through a number of its planning services.
CBA : Faces potential charges over fees-for-no-service and dodgy advice provided by Colonial First State and Commonwealth Financial Planning.
NAB : Under fire for falsifying customers' signatures on documents.
ANZ : Took years to act against dodgy financial advisers who failed multiple audits and even longer to compensate clients who had their funds compromised.
ASIC has only pursued with one criminal proceeding in the last ten years due to limited resources and problems with the law, according to ASIC's Louise Macauley.
The commission will consider their options and take action against the banks and their directors accordingly.