This week the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry published all of the initial submissions from organisations from across the sector, via InvestorDaily.
Prior to the commencement of the public hearings, a number of entities were asked to provide the commission with information concerning instances of misconduct or conduct falling below community standards and expectations that the entity had identified in the past 10 years.
Commonwealth Bank of Australia (CBA)
CBA named 15 former employees who have been banned by ASIC since 2011. All of them were either Commonwealth Financial Planning (CFP) employees or operated under Financial Wisdom Limited (FWL).
The most recent case involved the banning of adviser Kimberley Holgate earlier this year.
CBA explained that the former CFP employee was banned for five years for engaging in conduct that was Holgate likely to mislead by cutting clients’ signatures from documents held on file and pasting them onto new documents.
The bank also noted that the adviser was “not acting in the best interests of her clients when advising they rollover their existing super to a new product issued by CFSIL; not acting in the best interests of her clients by advising them to cancel existing insurance policies and apply for personal insurance issued by Comm Insure; and failing to prioritise the interests of her clients when advising them to acquire financial products which entitled her, her employer and its related entities to a financial benefit.”
In the period since 1 January 2008, CBA identified 15 adverse findings against the group.
Australia and New Zealand Bank (ANZ)
Meanwhile, ANZ admitted to the royal commission that 18 financial advisers falsified customer or compliance documents over the period and had deliberately overcharged fees.
“A number of different factors caused or contributed to the improper or non-compliant conduct of advisers, including the failure of ANZ’s processes, controls and supervision to protect against that conduct,” the bank said.
National Australia Bank (NAB)
NAB’s submission detailed extensive misconduct across its lending and advice divisions over the last decade, including a number of incidents relating to the misuse of customer funds.
“Some of the conduct was or is being investigated by the Victorian Police and ASIC,” NAB said.
“One financial adviser was convicted and sentenced to imprisonment. The financial adviser has appealed the sentence.”
Despite a plethora of examples of misconduct since 2008, NAB does not consider much of the conduct to be attributable to any particular “group culture”.
Westpac Banking Corporation
Westpac identified significant misconduct across its mortgages business, including bankers forging supporting documentation and customer incomes.
In November 2015, Westpac identified incidents of staff engaging in conduct to simulate the creation and activation of new accounts to artificially inflate metrics used to calculate their variable rewards.
“In particular, the conduct involved simulating the deposits and withdrawals of $50 to suggest that accounts were ‘active’. An internal investigation identified a number of instances of simulated account funding between January 2013 and December 2016, which resulted in the termination of a number of staff together with other disciplinary measures,” the bank admitted.
HSBC Australia
HSBC Australia detailed more than 20 examples of misconduct over the last 10 years, including a number of instances where branch staff stole money from customer accounts.
Over a number of weeks in late 2009 and early 2010, a staff member at an HSBC Australia branch allegedly made unauthorised use of a customer’s replacement bank card, withdrawing a total of $22,880. An internal investigation revealed a number of recurring breaches of HSBC Australia’s security procedures at the branch concerned, involving two further staff members.
“The employment of all three staff members was terminated for security breaches and the customer reimbursed. Other staff at the branch received supplementary training in security procedures,” HSBC confirmed.
In October 2009, a staff member spent $6,000 using a customer’s credit card. Following an internal HSBC Australia inquiry, HSBC Australia reimbursed the customer’s credit card and the staff member left HSBC Australia.
Between June 2011 and June 2017, a staff member at an HSBC Australia branch in Sydney misappropriated $913,115 from the accounts of eight customers. The bank discovered the conduct in July 2017 after an affected customer disputed a transaction and, following an internal investigation, HSBC Australia reported it to the NSW Police and ASIC.
“HSBC Australia continues to support the police investigation. All customers other than three have been reimbursed,” the bank said, adding that it is working to contact two of those customers, both of whom are foreign nationals and one of whom is presumed dead.
“The third has been contacted numerous times but is yet to provide details to allow return of funds. In the meantime, the money has been placed in holding accounts. The staff member’s employment was terminated consistent with the Consequence Management Framework.”
