The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is set to deliver its final report after close of business on Monday.
Ahead of the report, which was handed to the Governor-General Peter Cosgrove on Friday following the conclusion of the public inquiry led by Commissioner Kenneth Hayne, new research revealed that 39 per cent of Aussies have lost confidence in banks as a result of the findings, with almost a quarter saying they now plan to bank outside of the big four banks.
Angus Kidman, Editor-in-Chief at Finder.com.au, believes the main area of significance for older Australians will be around financial advisors, predicting that the report will suggest an increased need for transparency and a clampdown on fees charged for services.
“We can see, based on what has come out through the investigation, there’s going to be a lot of crackdowns on financial advisors,” he told Starts at 60. “That’s probably the segment that’s going to have the most relevance to older Australians as they are the people who are actively making use of financial advisors.
“These are people who are either getting ready to retire or they have retired and are often very dependent on those sorts of advisors because obviously superannuation is a complex topic and most people don’t want to navigate that on their own.
“The changes that come through should be positive changes because financial advisors are going to have to be much clearer about what kind of things they charge and what kind of value they are providing. So if that comes through I think that will be a positive thing for people in the older demographic, because it will make things more transparent and it’ll be clearer what people are paying for. We can expect to see recommendations there.”
Kidman also pointed out that the report will simply be delivering recommendations when it is published later today, stressing that the royal commission itself does not have the authority or power to make change actually happen, which would require legislation.
He also pointed out that, due to the impending federal election which is set to take place in May, any changes may take a minimum of six months to come into effect.
“There’ll be a lot of discussion around this but I can’t imagine anything really coming to pass until we get past May and the election,” he added. “We may well see announcements as part of the budget in April, so we might see suggestions about what’s going to happen but that will still have to pass through parliament.
“We may still be looking at more than 12 months before anything changes, because any rule changes that have tax implications have to be legislated in time for the tax year, and they’re not going to happen.
“There will definitely be suggestions for things that should change, as for actual clampdowns, I think we are still looking at six months away at least before we start to see those changes come in to play.”
Commissioner Hayne delivered the royal commission’s interim report in September last year, in which he blamed the “greed” of some of the country’s biggest banks for poor conduct and failings.
“Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty,” he wrote. “Banks, and all financial services entities recognised that they sold services and products. Selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.”