Money Spinners by Annelise Nielsen

Author:Annelise Nielsen
Language: eng
Format: epub
ISBN: 9781760893187
Publisher: Penguin Random House Australia

14

I fee dead people

Why did it happen? Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained?

Commissioner Kenneth Hayne, Interim Report1

The outright absurdity of the concept catapulted financial misconduct into the mainstream and horrified even the sagest observers of the banks. As hours of evidence about fees being charged for advice that was never given rolled on, it was almost easy to miss the most shocking headline of the entire royal commission. Michael Hodge was ploughing through audits of adviser files at the Commonwealth Bank’s Count Financial subsidiary from 2015, where problems with advisers charging fees for no service had been picked up and progressively ignored. It almost sounded innocuous when he read out one review: ‘Ongoing services have not been provided to clients. One file client dies in 2007. Contact made with deceased[’s] wife in 2013, but no action taken.’2

Michael Hodge continued, ‘And then if we go to 7287 is a report in relation to a different adviser. You will see: Adviser provided advice to a client in 2003 who passed away in January 2004. Adviser is aware that the client is dead but the ASF [adviser services fee] continues to be charged. When asked, he said he didn’t know what to do and he had tried to contact The Public Trustee and had not heard back.’3

With an air of fatigue, Michael Hodge had read out some of the most damning evidence ever to be presented to a banker in this country. Where once death and taxes used to be the only things you could rely on, the banks had found their way around one of them. Dead customers were being charged fees for financial advice. The absurdity of the concept takes a while to sink in. Each year, money was landing in the accounts of these advisers, when they knew they’d done absolutely nothing to earn it.

Compounding the issue was the confoundingly bad evidence given by CBA executive Marianne Perkovic. Perkovic is the executive general manager of Commonwealth Private and, by all accounts, is highly regarded in the bank. She has twenty-two years’ experience in financial services and was the youngest person to be appointed CEO of an ASX-listed company – Count Financial Limited. She was, unfortunately, a terrible witness. She was chastised by the commission’s lawyers, as well as the commissioner himself, for giving evidence that bordered on the deliberately obtuse. But she may have unwittingly become one of the best witnesses to demonstrate the clash between being a good corporate performer and someone who can speak normally to ordinary people.

She was prone to what came across as waffle. She started off slow and, as the time wore on, the questions to her were getting more abrupt and her answers even longer in response. When Michael Hodge asked when Commonwealth Financial Planning discovered the ‘fees for no service’ problem, she began,

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