Chris Skinner's blog

Shaping the future of finance

Banks charged dead people fees for a decade

Chris Skinner Author Avatar

Everywhere around the world, I find politicians and bankers in dodgy practices. It’s because power and money go together. We’ve seen this clearly in EU and USA with LIBOR, CDOs, PPI, bribes, parties, prostitutes and more, and I was reminded of it when seeing a presentation the other day by Platon.

Platon is a world-renowned portrait photographer and has photographed most political leaders around the world. At one United Nations Summit, he managed to be given the privilege of photographing every world leader attending from Gadhafi to Berlusconi. On presenting these images, he noted that nearly every single one was now on trial for corruption. Noted.

However, nothing quite matches how Australians do it and this month’s Royal Commission has unearthed a whole heap of dirt. The Commission has been bubbling for three years since April 2015:

Former financial planner and whistle-blower Jeff Morris told Guardian Australia he would tell senators that a royal commission was necessary to ensure rogue financial planners faced the consequences of their actions. “The reason I blew the whistle was because I knew victims stood no chance against the banks,” Morris said. The whistle-blower said the corporate regulator, Asic (Australian Securities and Investment Commission), also needed to account for its failure to keep the banks accountable. Morris said it was clear there had been “a spectacular failure by Asic to regulate this industry. You’ve got to wonder when somebody is going to take responsibility for their failures – because when Asic fails, it’s consumers who suffer.” He added the banks had been very slow to compensate victims.

The issue Morris raised is that the banks are taking fees for no advice. This is because the banks discovered it was highly profitable to sell customers financial advice and financial products. If they could charge customers for financial advice, and if that advice consisted of purchasing their financial products, then they would enjoy a profitable feedback loop. The business model was called “vertical integration”.

It became a bit of a political football when Malcolm Turnbull, the Aussie Prime Minister and former Managing Director of Goldman Sachs Australia, said that the opposition party was just using it as a distraction to respond to the news of the week.

“The critical thing here is that the high standards of putting the customer first, of ensuring that the trust of the community is justified,” Turnbull said. “That requires leadership from senior bank managers and they are providing that leadership and they will provide more. We have a strong regulatory structure to do that.”

However, the mud-slinging kept going resulting in the corporate regulator publishing a report scrutinising the practice: “Vertically integrated institutions and conflicts of interest.”

It looked at the quality of financial advice being offered by the two largest financial advice licensees owned or controlled by the Commonwealth Bank, ANZ Banking Group, Westpac, National Australia Bank and AMP.

It found their financial advisers had failed to comply with the best interests of customers in 75% of advice files reviewed and that there was an “inherent” conflict of interest arising from banks providing personal financial advice to retail clients while also selling them financial products.

The call for a Commission started to escalate such that, by November 2017, the voting populous of Australia said there should be an inquiry.

A majority of Australians would support a royal commission into the banks, with this week’s Guardian Essential poll showing 64% in favour … support is highest among Labor voters at 72%, and people intending to vote for someone other than the major parties (71%), but there is also clear majority support among Coalition voters and Greens voters – 62%.

So yes, a Royal Commission was set up after all, and amazing what it is revealing. If you haven’t been keeping up with it, here are the key admissions so far:

Banking royal commission told 90% of financial advisers ignored clients' best interests

Australia’s corporate regulator has revealed 90% of financial advisers who provide advice to self-managed super funds have failed to comply with the best interests of their clients.

AMP executive says company put profits before the law

The royal commission is focusing on the reasons Australia’s biggest banks and financial services companies have been charging customers fees without providing any services. AMP’s head of financial advice admitted there were reasons to be concerned about the company’s internal culture after he lost count of the number of times AMP has misled the corporate regulator.

CBA agrees it is the 'gold medallist' at fees for no service

Counsel assisting the royal commission, Mark Costello, asked Linda Elkins, from CBA’s wealth management arm Colonial First State, to confirm CBA’s poor record of charging fees for no service. “It would be the gold medallist if [the corporate regulator] was handing out medals for fees for no service, wouldn’t it?” Costello asked. Elkins replied: “Yes.” The commission was told that from July 2007 to June 2015 clients of CBA’s Commonwealth Financial Planning, BW Financial Planning and Count Financial businesses were routinely charged ongoing fees for financial advice where no advice services were provided.

Commonwealth Bank charged fees to dead clients

Commonwealth Bank’s financial advisers have charged dead clients for financial advice – in one case for more than a decade – according to shocking evidence heard at the banking royal commission. The commission was given evidence from a 2015 document for CBA’s Count Financial business that showed multiple examples of financial advisers charging ongoing service fees to clients who had died. One adviser knew that a client had died in 2004 but continued to charge adviser service fees that kept being charged for a decade. The adviser was getting about $65 a month in fees in 2014 and 2015. “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,” the CBA document noted. According to the CBA document, another customer of a different adviser had died in 2007 and contact was made with the client’s wife in 2013 but no action was taken to stop service fees being charged. Another adviser was found to have been charging service fees for multiple clients with no evidence of ongoing services being provided. He also charged fees to a dead client.

Falsifying forms and impersonating clients among revelations at banking inquiry

National Australia Bank’s top executives complained about having their bonuses “shaved after it was discovered hundreds of NAB employees under their charge had been falsifying client documents. One NAB executive argued it would send the wrong message to NAB’s leadership team and encourage them to sweep future scandals under the carpet. It has also been revealed a former ANZ financial adviser advised his clients to invest in a luxury marina apartment for $1.6m through their self-managed super funds, but when it failed to sell he siphoned off $100,000 and ANZ declined to compensate his clients. And the inquiry heard a client would have lost $500,000 in superannuation if she had followed the advice of a celebrity adviser whose staffer impersonated her on phone calls. The law firm Slater and Gordon announced it was partnering with global litigation funder Therium to investigate a major investor class action against AMP after more than a billion dollars was wiped from AMP’s market value after it admitted to lying to the regulator.

The whole scandal is pretty amazing and unsurprising, having seen the Wells Fargo account opening shenanigans and UK payments protection insurance disaster. Nevertheless, I’m surprised the Australian Commission hasn’t had more global prominence as the only coverage I’ve seen has been in The Guardian, who have been covering the Commission closely.  Right now, it looks as though AMP could face criminal charges for misleading Asic and that other lawsuits will follow as Westpac, AMP and CBA may have breached the Corporations Act. Other evidence uncovered that Australia’s major banks and financial planners may have been involved in alleged bribery, forged documents, repeated failure to verify customers’ living expenses before lending them money, and misselling insurance to people who can’t afford it.

What is really clear is that this mud will stick, and if you want to know the full story, then this Guardian article summarises up the whole thing nicely.


Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

Intelligent Money: Our Future Is Where We Do Not Think About Money, As Our Money Thinks For Us

What is the future?

Learn more

Learn more about Chris

About Chris Skinner

The Past, Present And Future Of Banking, Finance And Technology

Fintech expert Chris Skinner: countries need digital transformation to remain competitive

Join me on Linkedin

Follow Me on X!

Hire Chris Skinner for dinners, workshops and more

Learn directly from from one of the most influential people in technology, gain insights from the world's most innovative companies, and build a global network.

Chris’s latest book

Order now

Chris Skinner’s ‘Digital For Good’ Book Launch Event – CFTE

Top 50 Global Thought Leaders and Influencers on FinTech 2023

Chris Skinner
Commentator, CEO of The Finanser and best-selling author at The Finanser

Thinkers360 Thought Leader

Contact Me

Global Awards

Lifetime Achievement Award

Global 100 - 2024 Winner

Chris Skinner - Financial Markets Advisor of the Year - The Finanser - UK 2023

Best Financial Markets Advisor of the Year 2023

30 Best Regtech Blogs and Websites 2023

Kids creating the future bank | TEDxAthens

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award


Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser