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NewsWhat Does Kenneth Hayne’s Banking Royal Commission Mean for You?

What Does Kenneth Hayne’s Banking Royal Commission Mean for You?

There was a lot of news this week about how financial products and services might change after the findings of the Royal Commission.

Here are a few examples of how you might be affected:

Investors in big banks? Most of us have some investment in the banks due to superannuation. The value of the big four rose by $20 billion on the share market on Tuesday, recovering about one-quarter of the value lost since the Royal Commission began.

Victims of bank greed? At least three companies facing prosecution over fee for no service: AMP, ANZ, CBA, NAB and Westpac will refund customers at least $850 million. It’s not yet known who might face criminal charges. "I consider it open to a jury to conclude, beyond reasonable doubt" that these companies engaged in conduct that was "dishonest according to the standards of ordinary people", Commissioner Hayne said.

For those who can’t get compo from a bank, the government will also establish a compensation scheme of last resort going back 10 years and provides $30 million for past claims of misconduct.

Mortgage borrowers? Tighter lending standards will remain after Hayne recommended it. Hayne also recommended customers pay mortgage brokers upfront and commissions from banks be banned. The government has said it will only ban trailing commissions, not upfront commissions, but Labor may yet go further if elected. Brokers also face a new best interests duty and possible regulation as financial advisers. Brokers say interest rates will rise as a result of less competition in the industry.

Insurance policyholders? Commissions on life insurance and general insurance products could be wound back over the coming years, which might lead to lower premiums (but it might also make those industries less competitive as fewer switch). There will be no more unsolicited phone calls trying to sell you financial products, and there will be no cross-selling of super or insurance by banks or their advisers.

Financial advice customers? Tighter regulation is coming to financial advice - those who provide personal advice will have to be registered and the industry faces a central disciplinary body. Planners won’t be able to charge fees for no service anymore, and any ongoing fee arrangements would need to be reviewed annually by the client and recorded in writing.

 

Tell us how you’ve been affected by the commission in the comments below.

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Cheryl
Cheryl from NSW commented:

To the financial advisor who still works in the business of handling other peoples money with no ramifications for charging fees for no service and some of the highest fees in the business as well as misleading me into believing that by the time I was 85 I would have over 2 million dollars {I still have the graph} I did report you to the commission. Since you are very well known I still hope for some justice. Cheryl from NSW 

Jeanette
Jeanette from QLD commented:

About 25 years ago I received a small payout of $2,000. I thought it a good opportunity to invest the money to add to my retirement. Spoke to NAB (my bank) and was advised on a 'sound' investment plan. I retired a couple of years ago and contacted NAB. Guess what it had grown to? $2,000. Rather shocked, I questioned it and was told that the markets over the years had gone up and down and they could not be responsible for my choice all those years ago!!!!! Margaret from NSW 

Bruce
Bruce from SA commented:

I didn't think there would be any conviction over this, you wait and see. Any one else wouldn't get away with this mass deception , and the prime minister voted 27 times not to have a royal commission, we now know why. can't be trusted. 

Anonymous
Anonymous from SA commented:

My late husband retired in Dec 2011, due to ill health and when he claimed on his insurance, he said he was not paid what he should have been paid. The insurance was with AMP and he said he should have been paid out a few thousand more than they paid him. Marie Thomson 

Lynne
Lynne from QLD commented:

An NAB Banks broker in Melbourne sent me forms that were not filled in I was changing over from Mortgage House at the time money was tight and I was told to sign the forms and send them back somewhere along the line $100000.00 went missing the broker at mortgage house left and not contactable the NAB broker knew nothing later I lost my home and business putting NAB put it down to the Recession ? I had/ have a long standing MTG with Rams who was taken over by WESPAK due to the hardship I had to ask for as I was almost broke and on a pension I've been charged 5 % interest on my MTG all the while the interest rate for people who don't need hardship received lower interest rates of 3.60% it's so unfair it's like they don't care and not willing to help when they know your struggling Typical I'm ANGRY hope someone will listen to people like me and Act Thank you 

Graham
Graham from VIC commented:

I don't believe that Mortgage Brokers should have been involved in this inquiry. They certainly offer a wide range of loans from which the client can choose to go with as we did.with no pressure from the broker. The new rules if adopted would be detrimental to the general public. 

Brian
Brian from QLD replied to Graham:

I totally agree with you. Instead of applying for a mortgage with multiple lenders, clients of mortgage brokers supply their financial details once and based on that, the mortgage broker can match them to the most suitable lender. The problem with prospective borrowers applying to multiple lenders is that each enquiry is showing on the person's credit report and several enquiries are detrimental to their obtaining a loan. As to paying an up front fee to the mortgage broker, the median time taken from start to finish of around 10+ hours, who would be willing to pay upwards of $1,000 to the broker? 

Gertraud
Gertraud from ACT replied to Brian:

There is an issue with wrong names popping up when posting something. I'm not Brian from Queensland, let's see if the correct name comes up this time 

Todd
Todd from WA commented:

My wife is a finance broker and she works hard for her clients taking phone calls on the weekend and after business hours every day. What bank gives you that service? This is a joke that hard working finance brokers have been tarred with the same brush as the dishonest banks. She hates banks more now than ever. My advice is go to the smaller Community banks, at least they seem to give a damn about their clients. Kenneth Haynes must have a massive portfolio of big bank shares. 

Mike
Mike from NSW commented:

Not Yvonne from QLD? but Mike from NSW...…..where did that come from? Seems to me the Royal Commission into Banks has failed in it's duty. The banks have dodged a bullet and other businesses like Mortgage Brokers, who mostly do a good job for the customer are wearing the brunt of the decisions. Businesses who have brokered loans for their customers and given them choice of where to go are going to suffer! Talk about the big end of town running the show. And if you think Labor will fix the problem you are dreaming. 

Yvonne
Yvonne from QLD commented:

Seems to me the Royal Commission into Banks has failed in it's duty. The banks have dodged a bullet and other businesses like Mortgage Brokers, who mostly do a good job for the customer are wearing the brunt of the decisions. Businesses who have brokered loans for their customers and given them choice of where to go are going to suffer! Talk about the big end of town running the show. And if you think Labor will fix the problem you are dreaming. 

Yvonne
Yvonne from QLD commented:

why is that they are wondering wether or not to prosocute these guys. IF IT WAS ABOUT BLUE COLLAR WORKERS THERE WOULD BE NO HESITATION. NO WONDER TURNBULL DID NOT WANT A ROYOAL COMMISSION 

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