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The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry has been under way for the past few months after being established in December last year
The Federal Government, which was forced into calling a RC by pressure exerted by the Opposition and even some of its own bank benchers, has set a very broad term of references for the hand picked Royal Commissioner – ex high court judge Kenneth Hayne .
Commissioner Hayne has taken full advantage of these terms of references to delve into all areas of the financial services sector .
The revelations thus far have been damning .
The public hearings (streamed live on the internet) make for very uncomfortable viewing for those who have been caught short in their dealings with consumers
The RC has so far looked into consumer lending covering residential mortgages, car loans, credit cards and the interactions of finance brokers with the commercial banks
The spotlight was next shone on Financial Planners and their role in the sector providing advice to clients and how this advice is potentially conflicted around remuneration.
The RC reviewed inappropriate advice and provided some glaring testimony from consumers adversely impacted by poor and (in some cases highly likely to be) illegal advice
The current hearings are focusing on lending to small and medium enterprises whilst future hearings will look at Industry Super funds
The Royal Commission is a huge wake up call for the whole financial services industry.
It has shown our industry in a extremely bad light. It has shown many participants to be unscrupulous and deceitful and in some instances criminal in their actions to consumers of financial products.
The banks have been pilloried as have insurance companies and Super funds. Equally damning has been the testimony of finance brokers and financial planners and their wronged clients.
Hudson Financial Planning welcomes the scrutiny on our industry.
This attention is warranted and will be painful for many to hear and see both inside and outside the industry but it needs to be addressed.
For too long there has been elements in this sector that have flaunted the rules, disregarded societal norms and scoffed at regulations that have been put in place to promote trust and integrity in the industry.
If the RC achieves its desired outcome it will ;
Clean out and charge the bad elements in our industry once and for all,
Implementing new procedures and rules to ensure no repeat in the future
Instil confidence in consumers of financial products that they are needed and will achieve benefits for them.
Commissioner Hayne has been asked to submit an interim report by 30th of September and a final report by 1 Feb 2019
These dates can be extended and there has been some speculation the RC could be given more time as the amount of submissions has been more than anticipated.
Once the report and recommendations have been received the government will then publish a reply in due course.
Given the heightened publicity around the Royal Commission and the heated political climate close to a Federal election it is expected the commissioner’s findings will be endorsed by the Government and the Opposition. To do otherwise would invite scorn from the general public
It may even become an election issue if there is any divergence between the two sides of politics on how to fix this mess.