AMP, Westpac, NAB, Commonwealth Bank and other financial advice groups may face steep civil and criminal penalties for poor conduct and corporate deceit.
Their actions have breached various sections of the Corporations Act, Counsel Assisting Rowena Orr told the royal commission on financial services misconduct.
Speaking on Friday in a closing submission following the inquiry’s second round, she said the commission “has heard evidence of misconduct and of conduct falling below community standards and expectations in relation to the provision of financial advice by employees and authorised representatives of financial services entities”.
Ms Orr says AMP treated the Australian Securities and Investments Commission (ASIC) with an attitude “that was not forthright or honest, and demonstrated a deliberate attempt to mislead. It is open to the commissioner to find that AMP’s conduct in misleading ASIC was attributable to the culture and governance practices of AMP.”
AMP provided 20 misleading statements to ASIC over a two-year period from May 2015.
Evidence presented in the second round of hearings, which examined financial advice, shows profits and commissions took priority over sound investment advice.
In one case, a couple found their retirement dreams in tatters after taking a Westpac planner’s advice in 2015 to sell their Melbourne family home and use the proceeds to buy a bed-and-breakfast property.
The couple set up a self-managed superannuation fund and bought life insurance under the advice.
Michael Wright, GM of Westpac-owned BT Financial Advice, told the inquiry: “It was poor advice. This strategy was not right.
“Therefore, by default, there shouldn’t have been a need to set up the self-managed super fund. It wasn’t viable.
“Therefore, by default, we shouldn’t have set up the insurance. It wasn’t viable.”
Fair Work Commissioner Donna McKenna told how award-winning financial planning group Henderson Maxwell tried unsuccessfully to convince her to establish a self-managed super fund – a move that would have cost her $500,000.
The next round of hearings starts on May 21 and will focus on SMEs.