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NewsWhat Does Kenneth Hayne’s Banking Royal Commission Mean for You?

What Does Kenneth Hayne’s Banking Royal Commission Mean for You?

There was a lot of news this week about how financial products and services might change after the findings of the Royal Commission.

Here are a few examples of how you might be affected:

Investors in big banks? Most of us have some investment in the banks due to superannuation. The value of the big four rose by $20 billion on the share market on Tuesday, recovering about one-quarter of the value lost since the Royal Commission began.

Victims of bank greed? At least three companies facing prosecution over fee for no service: AMP, ANZ, CBA, NAB and Westpac will refund customers at least $850 million. It’s not yet known who might face criminal charges. "I consider it open to a jury to conclude, beyond reasonable doubt" that these companies engaged in conduct that was "dishonest according to the standards of ordinary people", Commissioner Hayne said.

For those who can’t get compo from a bank, the government will also establish a compensation scheme of last resort going back 10 years and provides $30 million for past claims of misconduct.

Mortgage borrowers? Tighter lending standards will remain after Hayne recommended it. Hayne also recommended customers pay mortgage brokers upfront and commissions from banks be banned. The government has said it will only ban trailing commissions, not upfront commissions, but Labor may yet go further if elected. Brokers also face a new best interests duty and possible regulation as financial advisers. Brokers say interest rates will rise as a result of less competition in the industry.

Insurance policyholders? Commissions on life insurance and general insurance products could be wound back over the coming years, which might lead to lower premiums (but it might also make those industries less competitive as fewer switch). There will be no more unsolicited phone calls trying to sell you financial products, and there will be no cross-selling of super or insurance by banks or their advisers.

Financial advice customers? Tighter regulation is coming to financial advice - those who provide personal advice will have to be registered and the industry faces a central disciplinary body. Planners won’t be able to charge fees for no service anymore, and any ongoing fee arrangements would need to be reviewed annually by the client and recorded in writing.

 

Tell us how you’ve been affected by the commission in the comments below.

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What Does Kenneth Hayne’s Banking Royal Commission Mean for You?

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Robert
Robert from NSW commented:

We've always known that banks were bastards; now we have the proof. All of the head honchos ( including those that jumped ship - CBA take note ) should be charged with whatever applies, and if found guilty, sent to gaol and their assets ( accumulated through obscene salaries and bonuses ) confiscated as the proceeds of crime. That might fix things. 

Colin
Colin from NSW commented:

On retirement in 1990 I took out two policies with CBA's insurance arm (which later morphed into Colonial Mutual) . This involved an investment of around $150K which promised to give me a small but secure pension. In October 2018 CBA sold its insurance arm to a Chinese (PRC) company. No consultation with Australian policy holder/retirees at all. It seems to me that the premise on which we made these retirement investments has been drastically changed because we now presumably will carry the very real Sovreign risk that attaches to China (PRC) and could conceivably lose these retirement assets. In the current volatile state of the World Economy and the increasingly hostile rhetoric between USA and China (PRC) this seems to be a very real concern. These investments ("Allocated Pensions") were encouraged by the Federal Government because of their propensity to reduce retirees' access to Aged Pension benefits. I don't think that this particular high-handed behaviour by CBA was touched on by the Banking Royal Commission. Any insights on this by the FiftyUp Club and its members would be greatly appreciated. Perhaps CBA has put safeguards in place to protect its erstwhile policy holders. 

Elaine
Elaine from NSW commented:

Approximately 5 years ago I went to Westpac to see a financial adviser, she said 'pay off your mortgage as soon as you can' I was in my 60's... DUH!! I was charged approximately $2000 for this advise which would have been ongoing had I not cancelled it. The advise was a total rip off! 

Anonymous
Anonymous from NSW commented:

Too little too late.s Whats not included.? I interest on pensonets borrowmg against homes...its higher than usual mortgage rates. 

Graham
Graham from QLD commented:

Financial Planners put a standard portfolio in place. Then charge you each month, up to 1% per annum of market value and review every six months. Little better than no service. This is a growth industry. Little wonder! 

Anonymous
Anonymous from QLD commented:

We were talked into crisiscare by an acquaintance with AMP and paid over$100000 and now worth nothing. I had a tachycardia attack and flown to Brisbane, thedoctor and specialist considered it a crisis but not AMP their doctor said no. So I hope they cope a dig in the ribs even though we are shareholders in AMP but everyone makes mistakes. 

Jane
Jane from QLD commented:

Had a policy with NAB for $690,000. The premium was $980 per month. Had to give it up because we could not afford the cost. 

Anonymous
Anonymous from NSW commented:

My husband and I paid a ‘Life Advice Fee’ to our Superannuation company on a monthly basis for a number of years (a significant amount). We ultimately decided to cancel this service as we could see ZERO benefit in keeping it running. We advise people who have this ‘service’ to review their exposure to these types of fees as the Royal Commision ‘fee for no service’ scandal really hit a nerve with us. 

Anonymous
Anonymous from NSW commented:

To me, and many more like me, the Royal Commission means only that I am poorer for the experience, and many lawyers are much wealthier. If the Government had done their job by having the relevant bodies like ASIC doing their jobs, the Royal Commission would not have been necessary. 

Ray
Ray from VIC commented:

It doesn't take into account the people that have been ripped off with their superannuation. I had a policy with one of these companies that according to the paperwork would pay me $216,000.00 at the age of sixty. It paid $69,000.00. No one wants to look into that. 

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