- The Financial Services Royal Commission began its proceedings today in Sydney.
- It has received almost 400 submissions from the public, with the overwhelming majority relating to banks.
- Counsel assisting the commission, Rowena Orr, says “inappropriate or unsuitable lending” is a theme in the submissions.
Submissions so far made to the Financial Services Royal Commission have been about misconduct including falsifying loan documents, poor financial advice, inappropriate lending, and delaying insurance claims.
The commission, headed by former High Court judge Kenneth Hayne, today opened with a rundown by Rowena Orr, senior counsel assisting the Royal Commission, of work to date.
The commission has 385 submissions so far, via its website, with most of them (85%) relating to banks. It has also received 48 responses from banks, regulators and other institutions.
“Approximately 84% of submissions relate to misconduct or conduct of financial services entities that falls below community standards and expectations,” she said at the hearing in Melbourne.
About 40% relate to culture and governance practices and 35% to the effectiveness of redress for consumers.
The commission’s first hearing of evidence, starting in about one month, will focus on consumer lending including home loans, car loans and credit cards.
“One of the themes that has emerged from the public’s submissions through the commission website is inappropriate or unsuitable lending,” says Orr.
A number of submissions raise conflicts of interest issues including incentive-based remuneration which mean staff might not act in the interests of the consumer by, for example, approving a bigger loan than the amount sought.
“We anticipate that as the volume of submissions from the public increases, new themes will emerge and different areas of focus will develop,” says Orr.
Another focus will be the financial planning.
“Australians involved engage financial advisers to improve and achieve aspirations and to plan for their future,” she says.
“Clients proposed trust and confidence in their financial advisers and it is important that their trust and confidence is well placed.
“The commission will produce a series of research papers examining sectors within the financial services industry.”
The big four banks have been preparing for the royal commission since it was announced in November following a long political debate over a series of scandals.
The Commonwealth Bank last week revealed a $200 million provision for expenses relating to currently known regulatory, compliance and remediation program costs, including the Financial Services Royal Commission.
Australia’s major banks face 15 different major inquiries, including the Royal Commission, following a series of scandals involving giving poor financial advice to customers.