Attwood Marshall Lawyers Legal Practice Director Jeff Garrett, a lawyer of 33 years’ experience in civil litigation, reflects on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services.
When former Australian Competition and Consumer Commission chief Graeme Samuel met with bank executives who quizzed him on how to stop the relentless public mantra of “banks are bastards,” he frankly responded that they should “stop being bastards!”
Reading his comments in the Sydney Morning Herald, I was taken back to when I first started work as an articled clerk at Attwood Marshall Lawyers in 1981.
My master solicitor and founding partner Bob Marshall had a figurine of a lawyer on his desk with an engraving that read: “Sue the bastards!” It was a fitting mantra for our firm, which continues to this day. Here we are, nearly 40 years later, still suing banks and insurance companies for misconduct.
In our personal injuries department, we witness on a daily basis the trauma caused by the unfair decisions of insurers, which cost our clients dearly in the way of rehabilitation and quality of life. Our commercial litigation team also sees the impact of financial advisers who, with their pursuit of personal commissions, have given incorrect advice and left their customers facing significant financial losses and emotional distress.
Of course, scandals involving the banking, superannuation, insurance industries, and their financial advisers, come as little surprise to us lawyers who “sue the bastards.”
The Royal Commission into the finances sector
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has now concluded. The Commissioner, Kenneth Hayne, submitted his final report to the Governor-General on 1 February 2019.
From bribery, forgery and ‘liar loaning,’ to exploitation of the dead, countless abhorrent practices rife within financial institutions have been exposed since the Royal Commission began. In April, the chief executive of AMP lost his job after the insurer admitted to lying to regulators. Around the same time, Commonwealth Bank of Australia (CBA) admitted that its financial planners charged fees to dead clients, in one case for as long as a decade.
Other examples of misconduct:
- In-house financial advisers providing customers with negligent or fraudulent financial advice, recommending investments in companies that were owned by the banks. Elderly customers were often advised to mortgage their homes and place the borrowed funds in risky investments so that the banks, financial advisers and related investment companies would receive huge fees and commissions from the transactions.
- Lending money to customers who clearly were in no financial position to repay those loans, including by falsifying supporting documentation for their income and failing to properly investigate customers’ financial circumstances.
- Acting against customers’ best interests to effectively bankrupt them and sell up their properties, even though there had been no default under the loans or any incidents of insolvency.
- The insurance arms of banks and finance companies deliberately denying legitimate claims made on insurance policies.
- Insurance companies breaking the law by cold-calling customers and selling products to lower socioeconomic and disadvantaged members of the community.
The Royal Commission was punctuated with a damning six-month interim report that said two prominent themes had emerged from the hearings: dishonesty and greed.
In trying to comprehend the motives of these financial institutions, Commissioner Hayne said: “Too often, the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty… How else is charging continuing advice fees to the dead to be explained?”
Weak responses to the banking Royal Commission
In 2018, submissions revealed former CBA chief Ian Narev received a performance bonus of 108 per cent ($2.86 million), while a crisis unfolded over the bank’s botched life insurance policies, alleged money laundering and claims its credit insurance was mis-sold.
It was also revealed the CBA board was dissatisfied with the performance of its former chairman David Turner and requested he return 40 per cent of his annual fees. After he refused, the board moved on, with the incident kept secret from shareholders.
In the courts, it is unlikely criminal sanctions will flow from the Royal Commission’s findings.
Even the Australian Securities and Investments Commission expressed in its submissions that work had to be done to stop misconduct, but conceded there was no evidence to instruct as to how.
The problems are enshrined in the financial sector’s culture. This was highlighted not only in the Royal Commission’s interim report, but also in the release of the new Banking Code of Practice and the ASX Corporate Governance Council’s draft corporate governance principles and recommendations, which are expected to be finalised in early 2019.
In the latter, the draft suggests that “a listed entity should instill and continually reinforce a culture across the organisation of acting lawfully, ethically and in a socially responsible manner.” However, several industry stakeholders have already rejected this draft principle.
With such a weak response from the authorities and reluctance from industry stakeholders to change, there is only one way to teach the banks a lesson. Sue them and hit them where it hurts.
Attwood Marshall Lawyers – helping you resolve your dispute
Since the Royal Commission, our commercial ligation team has received an influx of enquiries about grossly negligent or fraudulent financial advice. Our lawyers are ready to fight for victims who have lost their homes, life savings, or quality of life, because of the misconduct of the financial sector.
If you are involved in a dispute with your bank over loan repayments, irresponsible lending, excessive fees, unsuitable products, or poor financial advice, Attwood Marshall Lawyers can help you understand your rights and the best path to take to resolve your matter.
For a complimentary, obligation-free phone assessment of whether you are eligible for a No Win, No Fee claim for negligent or fraudulent financial advice, please contact Commercial Litigation Department Manager and Senior Paralegal, Amanda Heather, on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au. Find out more about our Commercial Litigation department by clicking here.
