Australia’s financial services minister yesterday said that the country’s banks have a lot of work to do to regain the public’s trust as executives prepared for another day of grilling before a powerful inquiry into the scandal-hit sector.
Minister for Revenue and Financial Services Kelly O’Dwyer backed comments by Australian Treasurer Scott Morrison that jail terms were possible after executives at AMP, the nation’s largest wealth manager, admitted it had lied to the corporate regulator to cover up charging thousands of customers for services they did not provide.
Commonwealth Bank of Australia (CBA), the country’s largest bank, admitted to the inquiry earlier this week that it was the worst offender in misappropriating fees and also misled the regulator about it.
“Is it any wonder that people would be critical of those companies who have engaged in this sort of behavior, absolutely not and it is not acceptable,” O’Dwyer told Australian Broadcasting Corp radio.
“It is for them to explain how they are going to regain the trust of their customers,” she said.
Executives from Westpac Banking Corp and Australia and New Zealand Banking Group were questioned yesterday over cases where their senior advisers provided inappropriate counsel to clients.
The inquiry heard from a nurse who lost her home after she and her husband took advice from Westpac.
McDowall said she was told that she could achieve her dream of retiring to run a bed-and-breakfast (B&B) by selling her home and using part of her and her husband’s pensions as a deposit for a loan on a B&B property where they could live.
McDowall followed the advice, but Westpac denied her the loan.
Documents presented showed Westpac had offered to return about A$50,000 (US$38,985) to cover only the fees it had charged McDowall for the advice and some of the losses of their savings.
The inquiry also heard that CBA withdrew advice fees from dead people’s accounts, and in one case one of its subsidaries did so for more than a decade.
The government-backed Royal Commission into the banking sector is just a couple of months into what is expected to be a year-long investigation.
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