SYDNEY (Reuters) – a request that exposed unrestrained greed and misconduct at major Australian banks and wealth managers ends this week before the final report, which could lead to radical reform of the financial sector in 12 of the world's largest countries.
Australian and New Zealand Banking Group (ANZ) Chief Executive Officer Shane Elliott walks with officials from the building where an investigation of the Royal Commission about misconduct in the financial sector is being conducted in Melbourne, Australia, on November 29, 2018. AAP / David Crosling / via REUTERS
A quasi-judicial investigation, known as the Royal Commission, was initially rejected as the “populist port” of the ruling conservative party, which showed that misconduct that could lead to tighter regulation.
On the 69th day of the hearing, in the course of the investigation, shocking tales of brazen robberies, ill-treatment of clients and even taking money from the dead were heard. His final hearings are scheduled for Friday.
In one of the hearings, the commission’s lawyers played a record of a life insurance seller, a cold call to a person with Down syndrome and urging him to subscribe to a policy that he did not need or did not understand. When the father of the man tried to cancel the policy, the company refused until the father taught his son to ask about the cancellation.
In another case, a blind, partially deaf pensioner, described, came to the branch of the bank and handed over “pre-filled” documents in order to guarantee the activities of her subsidiary pool. When the business failed, the bank went to the pensioner's home.
The country's largest property manager, AMP Ltd (AMP.AX) admitted to doctoring an allegedly independent report to the regulator on how he charged thousands of customers without providing a service. Investigation attorneys proposed that such fraud constitute a criminal act, and criminal charges could be in the final recommendations of Commissioner Kenneth Hane.
“What happened to us, which I always felt, was immoral, but I had no idea that what they did was not in fact legal,” said Ross Dillon, who testified to the request that the proceeds from the sale of his house were misappropriated by his bank. Reuters.
Investors destroyed about $ 40 billion ($ 29 billion) of the market value of the four largest banks in Australia and AMP for nine months after the investigation began, and some analysts expect a further fall in response to official recommendations before February 1.
Reputational and financial costs accumulate, deceiving margins in some of the world's most profitable banks.
Four major lenders – Commonwealth Bank of Australia (CBA.AX), Westpac Banking Corp (WBC.AX), Australia and New Zealand Banking Group Ltd (ANZ.AX) and National Australia Bank Ltd (NAB.AX) – and AMP promised to pay $ 1.3 billion to hacked customers.
The CEO of Commonwealth Bank declined during the investigation, as well as the CEO of AMP, the chairman and three directors. The Commonwealth Bank has since fired 41 employees for misconduct and reduced bonuses in the amount of $ 100 million. Industry-wide hundreds of employees lost their jobs.
“The banks will have more costs and it will be profitable because it will go in line,” said John Guadanyuo, head of investment at Antares Capital.
"There is a cultural problem, there is a problem of recruitment, there is a problem of remuneration, and I am not sure that the banks themselves know how to solve it."
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Public outrage will not allow the government to ignore the final recommendations of the commission, given that most polls show that they lost the elections expected in May.
Banks prevented some of the recommendations by eliminating unacceptable consumer lending practices, beating executive bonuses and leaving non-core businesses. Any statutory restrictions on bonuses would put Australia in the international vanguard of efforts to limit the extravagant wages of performers.
Australian banks have also begun to unwind their fashionable “vertical integration” models that were found as a result of the investigation in order to create a conflict of interest for financial advisors.
Pension funds have begun to cancel moving fees, known as trailing commissions – deducted from customers' accounts over the years, regardless of the services provided – in anticipation that they will be outlawed.
Despite the fact that Britain has banned financial planners to receive commissions for the sale from 2013, a direct ban in Australia will be even stronger.
Australian regulators are also under pressure to get tough, being exposed as timid and too reluctant to take decisive action against offenders.
The Australian Securities and Investments Commission, a corporate watchdog company, has already sued each of the “big four” banks and AMP as a sign of their new thinking.
(This story corrects the name of the commissioner in the sixth paragraph)
Report Byron Kay; Additional reporting by Polina Durán and Colin Pakham; Editing Talk: Coven