In its response to the Hayne inquiry’s interim report, which raised concerns with vertical integration, CBA argued that it is capable of managing conflicts of interest.
“Vertical integration provides benefits to consumers and while conflicts of interest exist, these can be effectively managed,” CBA said in its submission.
“The conduct examined by the royal commission, and that has emerged across the industry more generally, while occurring in a market where vertical integration exists, was (with some exceptions) not caused by that structure.
“It is important to note that the conduct identified by the royal commission, and also more generally across the financial services industry, arose largely as a result of misconduct on the part of particular individuals that was not appropriately managed or supervised by the relevant licensee, cultural shortcomings, or inadequate systems and processes that the licensees had in place. It was not conduct that arose directly as a result of the structure of a vertically integrated business.”
CBA considers that the root cause of many of the conduct issues in financial advice are unrelated to the structural integration of financial advice, investment platforms, and investment and superannuation products.
The bank further argues that the emergence and persistence of fee-for-no-service issues across the industry were related to “inadequate monitoring and detection by advice licensees, not the ownership of those licensees”.
“Whether a licensee is part of an integrated business does not affect its ability to adequately monitor and detect problems within its business,” CBA said.
ANZ made some interesting observations about how the advice industry has developed over time to focus on sales.
“As a generalisation, it can be said that, over a number of years and due to various events, the financial services industry developed a culture that became overly focused on revenue and sales,” the bank’s submission states.
Hayne’s interim report noted that the roots of the financial advice industry are in sales and that the industry is moving towards becoming a profession.
Where a financial adviser is an employee or authorised representative of a licensee that manufactures financial products, ANZ accepts that the licensee will have a commercial interest in maximising sales of that product.
“However, this will not be the sole interest of the licensee,” the bank said.
“The licensee will also have an interest in the conduct of its financial advice business in a manner that complies with the law, including the statutory duties owed by its employed or authorised financial advisers to their clients, and protects the licensee’s reputation (including by having advisers known for providing quality advice such that customers will wish to engage them).”
Like its big four peers, ANZ believes structural change prohibiting related entities from providing financial advice and being involved in the manufacture of financial products is not necessary.
Who were the previous CEO’s of the CBA. Now AMP Chairman how can that be
I thought today was 13/11/18 and not 1 April…..or perhaps the CBA spokes-person was auditioning for “Australia’s Got (no) Talent.”
What a disgrace. The behaviour of the banks is the significant reason our industry has ended at this point. Prior to their introduction and thirst for ridiculous margins the industry was doing quite fine without their input. We now have models where they are the major provider of industry dialogue from ‘our side’ of the equation and yet they clearly do not represent our interests. I trust the Royal Commission will see through the banks deceitful conduct and not provide a wholesale recommendation of throwing the baby out with the bath water approach.
Hmm. I’m thinking reverse psychology. CBA writes something so ridiculously untruthful that the RC says ‘thats enough – vertical integration is over’.
CBA’s rhetoric about it all being the licensee’s fault has already been utterly discredited.
https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC/Final_Report/b02
Typical CBA. Still run by a pack of liars.
So CBA has been fined 10,000 times more in dollar value for its advice behaviour than licenses, but blames advisers and licensees. CBA has had more Advisers banned than any other single group, but blames other advisers and licensees. CBA should really be on its knees apologising to its clients, advisers and the rest of the industry for its appalling behaviour and the financial stress caused to all these groups, rather than hiding behind a thin veil of fake news. Bring on those criminal charges to Bank Bosses.
This is disgusting by CBA! How deluded and total lies. This is factual and I emailed this info to Adele Ferguson in July 2016 and she only just replied last weekend as she is writing a book and wants to know if I can help. Full disclosure- I worked as Snr Adviser @ CBA for 6 yrs, now an IFA last 4 yrs. [b]This is how CBA does vertical integration.[/b] One of our clients husband died and she recieved life proceeds of $1 mil. She went to the CBA branch to pay off the home loan and was told she would need an appointment with the home loans person. CBA staff instead booked her to see the planner (who I know). Client went to the meeting not knowing she was not going to get her request finalized. During the 1st appointment the planner told my client she could invest $300k into CFS Moderate fund and $300k into CFS Balanced fund and pay off $100k of her home loan and put the rest in term deposit. No fact find, no SOA, no research, only a1st appointment with very specific advice by product and amount. Product flog of Colonial product and CBA deposits while keeping the client in debt.
I am so disgusted with the banks and their lies and flagrant disregard for the law and ASIC just lets them do it.
I think I will be repling to Adele Ferguson. And James Mitchell if your reading these please reply as a “reply” and I will contact you direct with all the info for you next scoop! I have hundreds of stories about CBA and it is NOT the licensees being bad….. IT IS THEM!
The culture inside CBA is an absolute disgrace as a starting point so for them to throw stones at the non-aligned financial advice industry is nothing short of laughable and pathetic.
Take that from someone who’s married to a long term CBA staff member that works in the corporate area who’s experienced it first hand and seen staff attrrition rates in the high 90% range. It was well known in the bank that it was only tolerated by Senior Executive MAnagement because revenue and sales target figures were being met asa result of a small few choosing to put up with it!
For them to also now throw stones at non-aligned advisers is just….incomprehensible and unfathomable!
And by the way too ANZ…lets see you fund any business that comes looking for money without them first providing you with a business model that focuses on a sales and business revenue growth plan – you absolute fools!
CBA how about blame the 53,000 Illegal AML/CTF over $10,000 cash deposit on the AFSL’s too.
And of course the dodgy CBA Life insurance definitions – yep the AFSL’s.
CBA’s banking systems gave thousands of overdrafts when they shouldn’t, made account admin & processing overcharging errors, undetected for 4 years – yep blame the AFSL’s
CBA closed performing loans of Bankwest customers just because it could be a complete F**kwit of a bank – of course blame the AFSL’s.
CBA didn’t follow responsible lending laws to thousands of customers – blame the AFSL’s.
CBA gave dodgy credit cards and limit increases when they should have – yep the AFSL’s again.
WTF are you talking about CBA – are you actually on the same planet ???
Pass the bucket and stand back for the spray. THATS B.S. !!!! Down in Wagga, a CBA bank adviser was found guilty earlier this year of systemic fraud and was sacked by CBA and de-listed by ASIC. No management was sacked. Where were the officials of her CBA owned AFSL. On vacation, or on a CBA sponsored junket, benefiting in brownie points from her efforts. The only people who believe that CBA spin in an RC submission are ASIC. Hopefully the sharp legal brains at the RC are watching the hand to see which way the bullshit ball is spinning
I blame a lot of my stress on my children. But I gave birth to them and raised them, so ……. umm???
This CBA submission is an absolute travesty.
Vertical integration ? CBA did not spend $XXX million to buy a licensee for charity.
And let’s not forget, some of the worst advice failures happened in their bank channel.
[b]ASIC need to remove ALL CBA’s Advisers & AFSLicensees immediately !!!![/b]
If CBA / ANZ, etc honestly believe this utter garbage they spew then they clearly have zero understanding of the Financial Advise laws / Corporations laws in this country, that as the owner of ALL these AFSLicensees they are directly responsible for the AFSL, Advisers and the Advice.
ASIC / Hayne – they must be removed from the industry NOW if they publicly deny taking ownership and responsibility of these problems.
Its all about distribution and share of wallett. Incentivise advisers by lowering annual / monthly fees provided of course they write a higher percentage of the vertically aligned product. Punish advisers with higher fees if they act in the clients best interest. How can any aligned and self respecting adviser stay with this group after these comments…
Financial advisers are already being suffocated by monitoring and compliance. Yet CBA says it’s still not enough to stop bad behaviour by advisers under their licences? They think what’s needed is even more monitoring and compliance? That’s probably the best reason I’ve heard for taking a completely different approach. Like banning vertical integration. Or taking action against managers who use punishment/reward systems to coerce advisers into behaving unprofessionally.
So just to be clear, any issues coming out of the RC to do with credit are the fault of the CBA regional and bank managers and not the responsibility of the CBA? Any issues to do with advice by CBA licensees is the responsibility of the licensee and any issues with insurance are the responsibilities of the CBA superannuation trustees (as most of the issues were in group life inside their super funds) not the CBA. Makes sense, I cant understand the confusion. Shame on you Mr Hayne!!
So now the CBA has never owned or run a licensee; give me a break
This is the same CBA that turns off adviser’s access to its platforms if they move out of ‘alignment?’
Bit like the arsonist filling out the claim form
I’ve long being saying that vertically aligned licensees create a “cult” they brain wash advisers, they use strategies to make the competition look terrible, whilst artificially making the home team look great.
I’ve even said they sit around all day thinking how can we get adviser X to write more business into platform A.
One reading this would call into question the ethics of those advisers licensed under these vertically aligned & owned licensees.
Shame on you CBA, passing the buck like that. All directives to the licensee would have come from CBA senior management. I remember hearing the CEO of a major bank openly say that their objective was to sell each of their customers at least 7 of their own products, including super and insurance. It has always been about maximising the share of their customer’s wallet. The larger the organisation, the greater the greed and the higher up the food chain, the greater to bonuses they receive. Individual Licencing is the only way to go. I am willing to bet that none of CBA’s senior management team have ever engaged a CBA adviser!
Remove the link between product and advice, reduce the compliance burden and reverse legislation that punishes good advisers. Start again and see how we go. Just get someone better at surveillance to weed out the crooks.
Well look at the big boys throw us all under the bus. What a pathetic attempt to try to brush off all these issues to the licencees. CBA you were one of the licencees, you owned the licencees, you have had adviser targets for income and products. You drove many advisers to the wall with your targets. Now you say no it wasnt us. CBA isnt a person, its made up of people though, that are brainwashed into the culture of the cba and act like little piggies suckling into the CBA teet to get thier little kpis. I worked for CBA for a long time, the people were great, but the managers were bloodsucking , selfish people just trying to increase their little bonus pool. Shaft the clients shaft the staff get your bonus was the managers motto. Everything we did was about bonuses, this is why we had these issues with advice, people trying to get bonuses. For cba to deflect like this is just horrible, how can they sleep at night.
CBA have done checks on the licensees (and their advice businesses) for a number of years and never noted any issues. Now all of a sudden they are forcing them on, plus passing the blame. CBA are a disgrace.
Laughable! You light the spot fires and then blame everybody else for the bushfire that evolved……nice one CBA!!
How can CBA, the beneficial owner of the licensees, expect anyone to believe they didn’t ( don’t ) have substantial control over the way the licensees work?
With everything that was exposed in the RC, and what would further be exposed if it wasn’t time limited, you would think the banks and AMP would just accept that they have been found out. But no, they continue to put lipstick on the pig. Their behaviour since the RC does no more than provide further evidence that really don’t care about anything but their revenue and protecting an adviser renumeration system that is critically flawed and should have gone down with the ark.
CBA are mandating all licensee businesses now have electronic record keeping. They have 100% control of the licensees and the standards within them. Do and say one thing in the public, do another behind closed doors. CBA and the licensees should be helping each and every advice business.
I have never seen a pig with lipstick on but I know the greedy managers at NAB FP chastised a planner in country vic for not reaching his negative geared and margin lending targets . Believe that CBA !!!!!
Interesting argument. One could ask what evidence there is that they can manage conflicts of interest, particularly ones that they create and are under their control with their licensees. You have to applaud the banks really. They have done more to destroy trust in the financial sector than you would have given them credit for, while simultaneously rationalising away anything that would affect profits. Three cheers perhaps?
You’re kidding me….right???
And PIGS will fly to the moon. You the bank and senior people had been informed many times of major issues and cover ups at high level. Your response- silence or send a cheque with silencing details. BS BS BS and if the RC ever has the fortitude they will uncover the facts. To blame advisers- you have to be kidding. I am sure there are a few who can restate the facts and name the senior people involved, within the bank and within its licensees and probably ASIC knows as well. Systemic issues only exist with management knowledge- money bonuses and greed still rule and will do so till you the bank recognise you have a major problem. maybe the next R C round will find the real reasoning and not let you deflect the blame.
Yes, and having readily available ATM’s in the lobby of casino doesn’t contribute to problem gambling.
If you don’t want a particular outcome don’t structure someone’s remuneration in a way that encourages them to do what you supposedly don’t want them to do.
Agreed.