As Wells Fargo waited to find out how much it would have to pay for past transgressions, an Australian bank hit the headlines for admitting to billing clients for fees. The catch: those clients had been dead for years, and at least some people at the bank knew it. Commonwealth Bank of Australia admitted as much during a government investigation, saying the practice of billing dead customers for “financial advice” went back years, in one case at least a decade.
These admissions came directly from Commonwealth executive general manager Marianne Perkovic, who said certain bank employees did in fact charge customers fees for financial advice they never actually wanted… and some could not want the advice, because they were dead. According to testimony during the official investigation, Commonwealth regulators learned of this behavior back in 2015, but failed to disclose the behavior to outside officials, opting instead to offer a “possible warning” to the advisors at fault. In the intervening years, Commonwealth has been refunding these fees, to the tune of $93 million (US).
All of this came out during the investigation, but Commonwealth has yet to speak to the media or offer any public statement on the situation. That’s not to say Commonwealth is out of the woods quite yet. The bank is at the center of a Royal Commission inquiry ordered directly by Prime Minister Malcolm Turnbull, as part of his promise to “restore public confidence” in the financial sector. Of course, Commonwealth is not the only banking institution on the hot seat. Other lenders are being investigated for various misdeeds, including “rate-rigging” and “money laundering” according to CNN. The banks accused of bad behavior Bank of America Merrill Lynch, which recently acknowledged a pattern of “systematically misleading clients” for years.
Coupled with the ongoing Wells Fargo scandal, these new revelations could lead to a consumer crisis of confidence in the commercial banking industry, especially directed at the big banks. While the consequences for some of these allegations of banking malpractice are yet to be fully disclosed, the consumer fallout continues to build. While the combination of bank mergers and other industry shifts has made it somewhat difficult for consumers to vote with their wallets, that time could come, if the big players in the market continue to dominate the headlines with this kind of blatant disregard for their customers.
No matter what regulators eventually decide, either for Commonwealth or Wells Fargo, the consumers can still speak very loudly if they have a mind to.
Ronn Torossian is the CEO of 5W Public Relations