Banking Royal Commission reports

THE interim report of the Banking Royal Commission is a down-to-earth account of what went wrong in the financial services industry.

“Greed”, says the Commissioner, “the pursuit of short term profit at the expense of basic standards of honesty”. 

“When misconduct was revealed”, he said, “it either went unpunished or the consequences did not meet the seriousness of what had been done”.

What can be done to change things?

The Commissioner noted that financial institutions and regulators have tried to pre-empt his findings with announcements about customer compensation schemes, the sale of offending parts of businesses and regulatory and enforcement initiatives. There have also been changes in industry structure and industry remuneration. 

What the Commissioner will be weighing up is what to recommend, noting that the conduct which his inquiries have turned up is illegal under the law as it stands.

Financial planning is an area in which retirees and certainly intending retirees have a specific interest in. Among the questions the Commissioner will be deliberating on is: how far can, and how far should, there be separation between providing financial advice and manufacture or sale of financial products.

CPSA’s position on the separation of financial advice and the sale of financial products is clear: they should be separated. In CPSA’s view, the most significant barrier to people seeking financial advice to enable them to maximise their investment returns within their tolerance for risk is distrust of financial planners. This distrust has been vindicated by the Royal Commission’s findings and the Royal Commissioner should recommend separation of advice and products.

CPSA will be making a submission to the Royal Commission to this effect.