Conflicts of interest between creators of financial products, financial planners and dealer groups will only be properly examined under a Royal Commission, consumer advocate Denise Brailey has said.
Brailey used her submission to the Parliamentary Joint Committee on Corporations and Financial Services to call for a Royal Commission.
“The banking sector has displayed little or no regard for the fact that the equity loans were secured over the victim’s residential home and would ultimately and obviously leave the clients homeless,” Brailey wrote.
“Banks cannot now be rewarded for those efforts by seizing on the pensioners’ residential homes. Such action would be a grave injustice to consumers of financial products and services.”
Brailey also used her submission to call for a full investigation into participants who provided a facility for, or those who were the recipients of, obsessive commissions.
“Banks and lenders, after lining their pockets with outrageous fees, commissions and charges with little remorse for developing the perfect financial product, try to avoid the issue of how the loans were approved in the first place, with zero checks and balances, amidst faulty and dangerous ‘rapid approval’ processes,” she said.
Brailey said Australian Financial Service Licence (AFSL) holders also need to be held accountable for financial products and services that are generally being sold on a commission basis to the general public.
“Trusting members of the public believed that the role of the AFSL holder was to ensure the products on offer were in keeping with ‘good advice’ and that financial strategies used to prepare specific plans for clients were given on ethical terms by ‘highly professional’ personnel who promoted those financial products,” she said.
Brailey has been a consumer advocate for more than 15 years. She has been an advocate for investors of Westpoint and Fincorp.
