In its submission to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, CHOICE has called on the Commission to use its special powers to compel banks, insurers and lenders to provide evidence behind high fees and harmful practices.
“CHOICE is calling for the Royal Commission to use its powers to compel the banks to expose the truth behind the problems we’ve been hearing from people,” says CHOICE CEO Alan Kirkland.
“This evidence will be crucial in making the case to end the cycle of misconduct, apologies and delay. In the interest of openness and transparency it is time for the banks to publicly release the evidence the Royal Commission has asked of them, in addition to responding to the information request published by CHOICE.
“The banks have spent the summer holidays explaining away past misconduct and promising to do better next time. It’s a story we’ve heard before, misconduct, followed by repentance, followed by more misconduct.
“The big banks have worked hard to hold up reforms that could have saved consumers from the appalling financial practices that led to the establishment of the Royal Commission.
“From delaying action on excessive ATM fees, to lobbying to overturn the Furture of Financial Advice reforms and attempting to prevent a Royal Commission, the banks deliberate strategy to hold up reforms has harmed consumers again and again,” Mr Kirkland says.
CHOICE would like the Royal Commission to compel the banks to:
- Disclose the actual cost to the banks of commonly charged fees such as account keeping fees, late fees and foreign transaction fees.
CHOICE’s latest survey has found 81.3% of respondents said that they would like to see the Royal Commission tackle unfair fees.
- Disclose what service mortgage customers are receiving when mortgage brokers are paid commissions for potentially the whole life of the loan
Mortgage brokers can receive trail commission payments on loans they arrange until the consumer switches products. What service do consumers receive for this ongoing payment?
CHOICE would like the Royal Commission to compel the insurers to:
- Disclosure what makes up insurance premiums
We’ve seen large year-on-year increases in premium prices, including existing customers being charged far more than new customers. CHOICE’s latest survey has found 71.3% of respondents think there is a lack of customer loyalty in the general insurance market.Transparency will allow people to understand why their premiums are rising, take control of the risks and find better offers when insuring their homes and cars.
- Disclose the data they are using to deny insurance to people with a mental health condition
People have come forward with stories of being excluded from cover for a range of mental health conditions unrelated to an actual condition they disclosed. If insurers claim this is justified by actuarial data, they need to release it.
- What are the incentives for financial sector staff to deny insurance claims?
People came forward with experiences of delays spanning years or unfair denials of claims. We want perverse incentives to deny claims to be exposed and removed.
CHOICE would like the Royal Commission to compel the financial advice firms to:
- Disclosure the number and percentage of people on high fee older commission style products
While the Future of Financial Advice laws protect new arrangements, older arrangements are grandfathered. This means that financial advisors have an incentive to let consumers languish on old, higher commission products.
Tom Godfrey, CHOICE Head of Media: 0430 172 669