CommBank admits it’s a ‘gold medallist in charging for no service’: Reports

A senior Commonwealth Bank of Australia (CBA) executive has admitted that the bank would be a “gold medallist” if the banking regulator handed out medals for charging fees while providing no service.

According to reports at all major media outlets, Linda Elkins, the executive GM for CBA’s Colonial First National division, made the admission while being questioned during a hearing on Wednesday of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Asked by the commission if “you’d be a gold medallist if ASIC [the Australian Securities & Investments Commission] was handing out medals for fee for no service”, Elkins replied “yes”, the reports said.

Meanwhile, another CBA executive acknowledged that the company had little knowledge of what was going on in its operations. Asked whether CBA’s systems “were so hopeless CBA had no idea what was going on in its business”, Marianne Perkovic, a director of Commonwealth Private, replied “yes”, according to the reports.

The commission was on Wednesday looking into CBA’s practice of charging customers fees when it did not actually provide them with financial advice, and heard that the bank knew as early as 2012 that it was continuing to charge customers of its Commonwealth Financial Planning business fees, even though they didn’t have a financial planner advising them because the advisers had left the business. But it took a further two years for the bank to inform the regulator, ASIC, of the regulatory breach of charging fees for services not provided.

Perkovic ran the financial planning division for “many years”, The Australian reported. 

On April 13, CBA made a statement to the Australian Securities Exchange in which it said that it had repaid about $88 million plus interest to customers who had been charged for financial planning services that had not received, and CEO Matt Comyn said that the business recognised CBA had “failed customers in our advice businesses over the past decade:.

“This is unacceptable and we owe our customers an apology for letting them down,” Comyn said.

CBA’s admissions, however, were relatively modest when compared with that of AMP, Australia’s biggest wealth management business, which has admitted that it not only charged fees without providing services to customers, but then misled ASIC on as many as 20 occasions when the watchdog investigated the breaches, according to multiple reports. The admissions came during two days of damaging hearings for AMP at the commission earlier this week.

In a statement on its website on Wednesday, AMP “apologise[d] unreservedly to our customers, our regulator and the community more broadly”, adding that “this is not the behaviour we expect in our company”. AMP said it had repaid about $4.7 million to wronged clients. 

The royal commission, headed by Queen’s Counsel Kenneth Hayne, is due to submit an interim report to the government by September 20 and a final report by February 1, 2019. It has so far received more than 3,400 submissions.

But on Wednesday, Treasurer Scott Morrison said some of the evidence already heard by the commission meant that financial services execs could face prison over their misbehaviour. Calling the evidence given by AMP “deeply distressing”, Morrison reportedly said that “this type of behaviour can attract penalties which include jail time”.

Starts at 60 has contacted CBA for a comment outside of regular business hours but has not yet received a response.

Do you trust the banking and financial services sector to provide you with good service in return for fees? Are you satisfied with your own bank?