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  • Hayne royal commission hits home for big four banks
  • By James Frost
  • 12/02/2018
  • Contributed by: Moses ( 5 articles in 2018 )
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Commissioner Kenneth Hayne has set the tone for a fast but punishing Royal Commission into Banking, Superannuation and Financial Services Industry on Monday as he revealed its first targets would be the bank's biggest profit centres and lashed out at the quality of their submissions.

At its first public hearing on Monday Commissioner Hayne revealed the banks had been asked to resubmit their homework after fundamentally misunderstanding the initial request for information about the nature, extent and effect of misconduct over the last ten years.

The submissions from the banks have not been adequate with the commission shortening the scope of its questions on February 2 but asking for a more fulsome set of answers.

The commission has not been deterred however and next month it will begin a series of public hearings focused on examples of dishonest and unfair behaviour in the banks' home loan and credit card operations.

Disturbing themes were fast emerging from its early investigations including inappropriate lending, inappropriate advice, falsified documents and the delaying of claims, with some cases involving breaches of the law.

Disturbing themes were fast emerging from its early investigations including inappropriate lending, inappropriate advice, falsified documents and the delaying of claims, with some cases involving breaches of the law.

Commissioner Kenneth Hayne referred to the Murray Inquiry, which found products must work as expected in order to be fair

Commissioner Hayne appeared unimpressed with the request for more time to compile a list of breaches of the law and asked what such a request might infer about the institution.

The Financial Review also understands that Commonwealth Bank asked the commission to accept one 75 page report instead of four separate reports for each of its subsidiaries totalling 200 pages. Commissioner Hayne accepted the request.

At the opening of the public hearing the terms of reference were read aloud where it was noted that Australia's banking and superannuation systems were both sound and stable and among the best in the world.

Commissioner Hayne referenced the review of the financial system led by David Murray in his opening statement, stating the system needed to be more than just efficient and resilient but also fair and just.

Senior counsel assisting Rowena Orr QC (centre) with barristers Mark Costello (left) and Eloise Dais (right).

The speed at which the hearings must be conducted and the interim and final reports delivered has been described by the banks as frenetic. Counsel assisting Rowena Orr, QC, also touched on the accelerated timeline in her opening remarks.

"The terms of reference contained in the letters patent is broad and the timeline to report is short" Ms Orr said.

Ms Orr also revealed that the first public hearings focusing on the home loans and consumer lending will include an exploration of car finance and credit cards as well.

She said the commission has issued 32 notices to produce documents and envisages more would be issued over the course of the hearing.

Ms Orr acknowledged the terms of reference which referred to the right of all Australians to be treated honestly and fairly in their dealing with financial services providers. She said the purchase of a home was perhaps the most substantial and stressful transactions of their lives.

"The need for honesty and fairness in this context is paramount. The commission will hear evidence of events involving certain financial services entities in the context of home lending that suggest that consumers have not always enjoyed the right to be treated honestly and fairly when it comes to home loans."

Since the commission began accepting online submissions three weeks ago it has received almost 400 contributions. Of these, 49 per cent pertained to banking, 18 per cent to superannuation, 6 per cent to general insurance and 6 per cent to life and disability insurance.

At a product or service level the nature of the submissions was 31 per cent pertaining to personal finance, 17 per cent to superannuation, 13 per cent to small business finance, 12 per cent to mortgage brokers and 9 per cent to financial advice.

The commission said it would periodically produce papers on aspects of the banking, financial services and superannuation industries such as the surprise report on the banking industry it released last week.

It identified 73 separate inquiries and reviews in this area and committed to producing a report that reviewed and condensed this work.

A paper focusing on the financial planning industry would also appear soon. The commission noted 85 per cent of financial planners were associated with financial product manufacturers in some way.

Ms Orr said it was five years since the introduction of the Future of Financial Advice reforms which banned conflicted forms of remuneration and the time was right to revisit the reforms and evaluate them

Following the decision of the big four banks to waive confidentiality agreements struck with both aggrieved customers and employees, Hayne said such agreements would not be accepted as an excuse not to appear, answer a question or produce documents.



Source: http://www.afr.com/business/banking-and-finance/financial-services/hayne-royal-commission-hits-home-for-big-four-banks-20180212-h0vyh6

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