Prime minister wants financial advice given in plain language and conversations with customers recorded

Offending bankers will be brought to account, Malcolm Turnbull says

Malcolm Turnbull wants bankers and financial advisers to be forced to give plain language advice to their customers and have their conversations recorded.

The prime minister is angry and disappointed about revelations about banks and financial planners unearthed by the banking royal commission, saying there are too many cases where customers were not put first.

“Banks and financial advisers have a solemn duty to put the interests of their clients and customers first,” Turnbull said in Sydney on Saturday.

As the Hayne commission was told on Friday that AMP could face criminal charges for lying to the corporate regulator, Turnbull said his government would make sure those responsible were brought to account.

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“We will make sure this won’t happen again,” he told the Weekend West.

“Those who have done the wrong thing must be held to account - whether they are financial advisers, whether they are bank executives, whether they are directors - it is vital.”

Turnbull has told the banks they should change their processes for giving advice to customers, saying disclosure documents were often written “by lawyers, for lawyers” and difficult to understand.

“It’s very important that products be explained in plain language and I think that we should, in 2018, be ensuring that that discussion is actually recorded,” he said.

If advice was recorded, financial advisers could be held to account if something went wrong.

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“If an issue arose, you would be able to see whether the adviser actually did do the right thing or not,” he said.

While Turnbull concedes it was a “political mistake” not to call the royal commission sooner, he does not accept responsibility for any misconduct that has occurred within the banking and financial services sectors.

“The responsibility for wrongdoing lies with the people who did the wrongs. Let’s be clear about that,” he said.

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The Liberal MP Sarah Henderson wants the Australian Securities and Investments Commission to be overhauled, after the corporate regulator conceded it negotiated rather than prosecuted misconduct cases and had launched only one criminal case in the past decade.

“Asic’s duty to the Australian people is to be a feared and effective regulator, and on that score it has fundamentally failed,” Henderson said on Saturday.

Meanwhile, the pressure on AMP’s chair and board has increased after barristers for the banking royal commission suggested Australia’s largest wealth manager face criminal charges.

The senior counsel assisting the commission, Rowena Orr QC, said AMP and its advice businesses misled Asic 20 times from 2015 to 2017 about the nature and extent of its fees-for-no-service practice.

The fees-for-no-service scandal has already claimed AMP chief executive Craig Meller’s job. There is now increasing speculation about the future of the AMP chairman, Catherine Brenner, with the board reportedly preparing to hold a crisis meeting on Sunday.