Wealth management behemoth AMP will join the big four banks under the microscope in the second round of hearings from the royal commission into the finance sector that will focus on financial planning scandals.
The banking royal commission will over the next two weeks turn its investigation to a range of issues that has beset the financial advice sector including fees for no service, inappropriate financial advice, inappropriate conduct and issues with investment platform fees.
Yet some big named institutions in the sector with financial planning issues in recent times – including Macquarie– will not be used as case studies neither will the inappropriate behaviour of planners within the Commonwealth Bank network.
Monday’s hearing before Commissioner Kenneth Hayne, QC, is expected to begin with an opening statement by the counsel assisting the royal commission, most likely by senior counsel Rowena Orr, QC.
The royal commission will call Australian Securities and Investments Commission deputy chairman Peter Kell as first witness for the second round of hearings.
Mr Kell is expected to give an overview of the financial planning sector that includes ASIC’s wealth management project and its focus inappropriate conduct and fees.
Mr Kell was originally only expected to appear as a witness later in the second round of hearings but was moved up to give evidence on Monday. He is expected to also give evidence towards the end of the second round of hearings.
On Friday, ASIC said it had signed a court-enforced deal with CBA to make a community payment of $3 million after the bank charged tens of thousands of customers for annual reviews they did not receive.
ANZ agreed to a similar payment a week earlier for charging some of its customers fees for no service.
CBA witnesses will be called over the next two weeks to give evidence about the bank’s fees-for-no-service issues and investment platform issues.
AMP and its subsidiaries AMP Financial Planning, Charter Financial Planning and Hillross Financial Services will be the first to face the royal commission this week over fees-for-no service and platform issues.
AMP head of advice Jack Regan will give evidence on behalf of the wealth manager.
As of December, AMP, ANZ, CBA, NAB and Westpac have now paid or offered customers $215.9 million of an estimated $219.5 million in refunds and interest as part of ASIC’s fee-for-no service review program.
Both AMP and CBA will be the case studies for issues with investment platform fees.
The royal commission will also review inappropriate financial advice and inappropriate conduct by financial planners.
Counsel assisting the royal commission, Rowena Orr.
Photo: Fairfax Media
ANZ, which sold its wealth arm last year to IOOF, and its former subsidiaries RI Advice Group and Millennium 3 Financial Services, will be used as case studies for both the inappropriate advice and inappropriate conduct by planners.
Westpac and its wealth manager BT Financial Group as well as AMP and its subsidiaries, including the now closed Genesys Wealth Advisers will also be grilled over inappropriate advice given by their planners.
National Australia Bank will join ANZ and Millennium 3 Financial Services as the case studies for the royal commission’s review of improper conduct by financial advisers.
A NAB whistleblower revealed to Fairfax Media in 2015 that the bank’s wealth arm had been dealing with sackings, risk warnings, forgery and misconduct.
Several Millennium 3 planners have been banned for misconduct over the past ten years, though it does not appear to be any worse than the planning arms of CBA, Westpac, NAB or AMP.
The last stage second round of hearings will focus on oversight of the industry and will include evidence from ASIC, Financial Planning Association of Australia, Association of Financial Advisers and little known independent advisory network Dover Group.This article was first published by https://www.smh.com.au/
Author: Sarah Danckert