14 October 2014
The Commonwealth Bank (CBA) was awarded the dubious honour of a CHOICE Shonky Award today following the slick PR campaign it served up to apologise for nearly a decade of dodgy financial advice.
“We expect a lot more from a big four bank than a slick YouTube video,” says CHOICE chief executive, Alan Kirkland.
“CBA presided over one of the worst financial advice disasters in Australian history. While this stretched from at least 2003 to 2012, it was not until July 2014 that the CBA bothered to make any apology. And at the very same time as making that apology, the CBA was actively lobbying the parliament to remove financial advice protections for consumers. This twisted corporate logic defines what the Shonkys is all about. Saying one thing to the public and doing the opposite when they think no one is looking.”
Earlier today CHOICE told a Government Committee that key protections for consumers seeking financial advice must be reinstated after the wind back of the Future of Financial Advice (FoFA) protections earlier this year. The Committee is looking at proposals to increase education standards for advisers but CHOICE says this is not enough.
“Raising education standards in the financial advice industry without addressing conflicts of interest will only lead to better educated advisers taking advantage of consumers.”
“FoFA regulation and legislation must be amended to establish a clear, professional obligation for advisers to act in their clients’ best interests with no exceptions. We also need to rule out all kinds of conflicted payments like commissions for insurance products and bonuses for bank staff.”
“Until we fix FoFA, the CBA’s of the world will be able to continue their shonky behaviour.”
“We believe consumers deserve a lot better from CBA. The bank acknowledged that advisers failed in their primary obligation – to act in their client’s best interests. Yet they have successfully lobbied for the obligation to act in a client’s best interests to be watered down in legislation. If CBA is genuinely repentant they need to call for the reinstatement of consumer protections in FoFA.”
“Not only did CBA advisers breach their professional obligations; the CBA broke the trust the community had placed in it. We hope this Shonky encourages consumers to look critically at the financial products and services offered by the bank and question whose interests they are really serving.”
For further information on CBA’s Shonky Award visit shonkys.com.au.
This morning CHOICE CEO Alan Kirkland presented at a Hearing for the Inquiry into proposals to lift the professional, ethical and educational standards in the financial services industry which is being conducted by the Federal Government’s Parliamentary Joint Committee on Corporations and Financial Services. The Inquiry is examining ways to lift standards across the financial advice industry but CHOICE argues this cannot be done without addressing conflicts of interest.
The Future of Financial Advice, or FoFA, reforms were introduced in 2012 following extensive consultation with industry, government and consumer groups. In May 2014, the Commonwealth Bank made a public submission to the Senate which supported lower standards of consumer protection in financial advice.
In June 2014, the Government implemented changes to financial advice protections through regulation, with further changes through legislation still to follow. CHOICE and other consumer and seniors groups strongly opposed these changes as they removed essential consumer protections. Further information is available at: https://www.choice.com.au/consumer-advocacy/campaigns/financial-advice