Financial Planning
Financial advice under the Royal Commission spotlight next month

The Royal Commission will set its sights on the financial advice industry in April, with the first hearing taking place on the 16th.

The first round of public hearings commenced today and focused on consumer lending practices regarding credit products including home loans, car loans and credit cards.

Case studies used in the hearings will involve NAB's Introducer Program and fraudulent home loan applications; CBA's accreditation of its brokers; Westpac car finance practices; and Citi's imposition of international transaction fees.

An indicative list of witnesses includes Financial Rights Legal Centre coordinator Karen Cox, NAB executive manager, growth partnerships Anthony Waldron and NAB executive general manager consumer lending Angus Gilfillan.

So far, the Royal Commission has received 1,894 public submissions, the majority (67%) of which focus on banking, followed by superannuation (11%) and general insurance (6%).

The Financial Ombudsman Service recently suggested in a submission to the Royal Commission that financial advisers account for more than a third of all serious misconduct issues since early 2012.

These investigations involved instances of fraudulent or grossly negligent conduct and willful breaches of the law.

Despite this, the proportion of investments and financial advice disputes accepted by FOS over the last decade only account for 5% of the total. The most common issues cited being the provision of inappropriate financial advice and failure to follow customer instructions.

FOS stated: "Inappropriate financial advice can result in consumers investing in unsuitable products and suffering losses for which they were unprepared or financially unable to support. This can impact their financial wellbeing and plans for retirement."

Further, 55% of all unpaid determinations involve financial advisers, adding to a $14 million bill of compensation yet to be paid as at 31 December 2017.

Read more: Royal CommissionNABAngus GilfillanAnthony WaldronCBACitiFinancial Ombudsman ServiceFinancial Rights Legal CentreIntroducer ProgramKaren CoxWestpac
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