A decade of scandal and financial misconduct by some of Australia’s largest banks has been intricately laid bare over the past months by form of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

Marking one of the greatest upsets to the Australian public, revelations include the falsification of documents, bribery, dishonesty to regulators and the extortion of fees from customers that have long-since passed. 

As an undoubted sharp blow for an industry that seemed practically unscathed from the degree of vilification and colossal fines suffered by the European and US banks after the global financial crisis, it appears Australia’s relative lack of political and regulatory audit has allowed misbehaviour to resultantly supersede. With Australian households the second-wealthiest in the world behind Switzerland, a breeding of greed evidently followed as a host of financial professionals seeked to gain their share of their goods.

“In terms of exposure to the public, there has never been anything like it,” commented Allan Fels, who oversaw Australia’s competition regulator from 1989 to 2003, in an interview. “The key thing is it has been powerfully conveyed to every Australian. Their attitudes will never be the same and their demands for the government to do something about it are massive.”

The price to pay for these major banking corporations is set to be costly with new stringent government penalties already announced in an attempt to address the various corporate wrongdoings while regulators are also looking to up their powers. Once-easygoing politicians have further called for a review of how various leading banks are structured with the view to separate their services as a fight against vertical integration. Analysts have also been seen to snip earnings forecasts with rare sell recommendations.

The enquiry has also seen disruption to some of the biggest movers and shakers within Australia’s banking sector including 169-year-old AMP and the resignation of their chief executive officer Craig Meller within days of acknowledging AMP did in fact overcharge customers for services they did not receive. The firm’s chairman, Catherine Brenner, has also since resigned.

“Where the Australian Royal Commission has evoked great shock and outrage, it will undoubtedly allow for a much-improved regulatory environment, as we have seen in Australia and globally. Though a lot of people have suffered as a result, the Australian public can have peace of mind that such degrees of wrongdoing are incredibly unlikely in the future”, comments Montfort financial advisor and pensions transfer specialist Alex Norwood.

The final report is due to be delivered 1st February 2019 by commissioner Kenneth Hayne who will certainly have his work cut out for him in consideration of the expanse of the inquiry, including banks, insurers and all other types of financial providers and superannuation funds however excluding self-managed funds, and the limited time frame to deliver the report.

“We ourselves at Montfort have witnessed advice, specifically on pension transfers from the UK to Australia, based upon receiving funds under management, regardless of whether the advice was correct or not. Should the Royal Commission attempt to open this box, they would find a treasure chest”, further adds Montfort’s founder and managing director, Geraint Davies.

The Australian taxpayer is further expected to foot the cost of the Royal Commission, estimated to total $75 million, with its review of witness testimony and victim evidence to deliver a series of recommendations, which may include revised laws or regulations that govern the banking sector. For those Australian consumers affected, the Royal Commission will not compensate or revoke the verdict of any cases already trialled before courts, including bankruptcy hearings.

Where the Royal Commission is not set to have any direct material impact on banking operations, it is likely to add regulatory and due diligence pressure - all which may result in lower margins and credit ratings, and further brand damage both in Australia and internationally.

“We appreciate the grave concern the Royal Commission has given a lot of our clients with many emigrating from the UK to Australia that will now be faced with an unfamiliar and seemingly untrustworthy financial and banking sector”, comments Alex Norwood.

“Where a lot of firms have proven their unethical approach to this sector, there are still a great number of professionals who operate with only the highest level of due diligence. Those that are already residing or plan to reside in Australia must attempt faith in this industry. Better outcomes will inevitably ensue for a much-safer financial environment”, further states Alex Norwood.

“For now, we would recommend individuals be as patient as possible ahead of the Royal Commission report publication. We also deem it imperative to receive advice from an independent financial firm sooner rather than later should you be considering emigration, and particularly so where you may have any similar uncertainty”, notes Alex Norwood.

Should the events surrounding the Australian Royal Commission concern you in light of any emigration to Australia, contact Montfort to speak to one our leading financial advisors or pension transfer specialists via +44 (0)1483 202072 or info@montfort-intl.com; montfort-intl.com

Photograph © AAP
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