The final report of the Banking Royal Commission (Royal Commission into Misconduct in the Banking Superannuation and Financial Services – the Commission) was tabled on 4 February 2019. In this article, our Associate, Helen Phelps, outlines some important issues you should be aware of – particularly in relation to superannuation, estate planning and estate management.

The report

The report, which is in excess of 1000 pages, contains 76 recommendations for the banking, superannuation and financial services industry. These recommendations include recommendations for further civil and criminal action against a number of major entities. The report also recommends the establishment of a compensation fund for consumers. The government confirmed it will commit to actioning all 76 recommendations.
Of these recommendations, several may have an impact on estate planning and management practices. You should take these recommendations into account when you’re establishing your estate plan or when acting as an executor or administrator of a deceased estate.
You can read about the key points that relate to deceased estate matters below.

Fees for no service

The Commission highlighted ‘fees for no service’ scenarios. A common scenario identified by the report is:

  • money was taken from a client
  • the money was taken as a fee for advice given, or to be given, to the client by an adviser
  • the party charging the fee knew that the promised advice hadn’t or couldn’t be given (because the customer had died)
  • the charging party took the money anyway and either paid it to the advisor or took the money for itself.

One entity identified more than 4500 customers who have been affected by ‘fees for non-service’. In response, the Commission recommended that legislation be implemented to ensure that ongoing fee arrangements:

  • be renewed annually by the client
  • record, in writing, each year, the services that the client will be entitled to receive for the fee and the total of that fee to be charged
  • do not permit or require the payment of fees from any account held for, or on behalf of, the client, except on the client’s express written authority given at, or immediately after, the latest renewal of the ongoing fee arrangement.


Superannuation is another area that received significant scrutiny by the Commission, recommending the following changes:

  • consulting with Aboriginal and Torres Strait Islander peoples to see whether the definitions of eligible superannuation beneficiaries are prohibitive to the recognition of Aboriginal and Torres Strait Islander kinship structures
  • appointing the Australian Securities and Investment Commission (ASIC) as the primary conduct regulator overseeing superannuation
  • creating civil penalties for breaches of law governing the conduct of superannuation trustees and directors
  • prohibiting the deduction of any advice fees from a MySuper account
  • requiring all fees from non-MySuper accounts to meet annual disclosure requirements
  • prohibiting entities from hawking superannuation products to attempt to prevent consumers being sold superannuation products that are not in their best interest.

Funeral insurance

Funeral Insurance is currently excluded from the definition of a ‘financial product’. This means that the regulations that apply to financial products do not apply to funeral insurances. The Commission  recommended that funeral insurance policies should be included within the definition of financial products to ensure these rules apply. This recommendation is intended to reduce the number of policies that are, on average, paying out one-third to one-fifth of the premiums collected during the life of the insurance.

Further action

The Commission made a number of recommendations for further action, including civil and criminal legal proceedings against a number of the relevant entities. The Law Council of Australia has supported these recommendations. The Council noted that the implementation of the recommendations will have a positive impact on consumers and will assist in ensuring they are treated fairly and honestly.
The government has confirmed that they intend to follow the recommendation for a ‘compensation scheme of last resort’. This will allow consumers to have their cases heard. The industry will pay for the proposed scheme.

SHG can assist you

In light of the Commission’s findings, you may be concerned that your current insurances or superannuation may not be in your best interests. If you are, or have been, a legal personal representative of a deceased estate, you may be concerned that the estate has been charged fees for no service. If so, we recommend you seek appropriate professional advice, including legal and financial advice.
To contact our Wills & Estates team, please call 02 6285 8000 or email us.