Prime Minister Malcolm Turnbull is angry over royal commission revelations and wants bankers and financial advisers to be forced to give plain language advice to their customers and have their conversations recorded.
“Banks and financial advisers have a solemn duty to put the interests of their clients and customers first,” Turnbull said in Sydney on Saturday.
Over the past two weeks, the Hayne royal commission unearthed a number of examples of misconduct, which included banks continuing to charge fees to people who had died.
“I’m angry, I’m disappointed of course, I think like everyone is,” Mr Turnbull said in a wide-ranging interview with the The Weekend West while on a two-day visit to Perth this week.
“A lot of these banks and financial institutions, and … certainly the financial planning industry … there are too many cases where customers were not put first.”
“Banks and financial advisers have a solemn duty to put the interests of their clients and customers first,” he said.
As the royal commission was told on Friday that AMP executives could face criminal charges for lying to the corporate regulator, Mr Turnbull said his government would make sure those responsible were brought to account.
“Those who have done the wrong thing must be held to account –whether they are financial advisers, whether they are bank executives, whether they are directors – it is vital,” he told The Weekend West.
“We are determined to do everything to ensure this does not happen again.”
Mr Turnbull has told the banks they should change their processes for giving advice to customers, saying disclosure documents were often written “by lawyers, for lawyers” and difficult to understand.
“It’s very important that products be explained in plain language and I think that we should, in 2018, be ensuring that that discussion is actually recorded,” he said.
“If an issue arose, you would be able to see whether the adviser actually did do the right thing or not.”
While Mr Turnbull conceded not calling the royal commission earlier was a “political mistake”, he said does not accept responsibility for any misconduct that has occurred within the banking and financial services sectors.
“The responsibility for wrongdoing lies with the people who did the wrongs. Let’s be clear about that,” he said.
Liberal MP Sarah Henderson has demanded ASIC be overhauled, after the corporate regulator conceded it negotiated rather than prosecuted misconduct cases and has launched only one criminal case in the past decade.
“ASIC’s duty to the Australian people is to be a feared and effective regulator, and on that score it has fundamentally failed,” Ms Henderson said.
AMP board in crisis talks
Meanwhile, the pressure on AMP’s chair and board has increased after barristers for the banking royal commission suggested Australia’s largest wealth manager could face criminal charges.
There is ncreasing speculation about the future of AMP chair Catherine Brenner, with the board reportedly preparing to hold a crisis meeting on Sunday.
Senior counsel assisting the commission Rowena Orr QC said AMP and its advice businesses misled ASIC 20 times from 2015 to 2017 about the nature and extent of its fees-for-no-service practice.
The fees-for-no-service scandal has already claimed AMP CEO Craig Meller’s job and wiped $2.2 billion off AMP’s market value during the commission’s two-week financial advice hearing.