7 December 2018

Royal Commission Puts Banks’ Behaviour Under The Microscope

Charlie Young
Charlie Young Litigation Lawyer

Never has there been a greater focus on banks, superannuation funds and other financial institutions than as we’ve seen in the ongoing Royal Commission.

We are seeing more and more allegations of misconduct, irresponsible lending practices, unfair bank fees, and the mismanagement of loans, just to name a few.

This not only can affect an individuals’ personal finances but it can also affect people in positions of responsibility with duties to others.

Company directors manage company assets and must act in the best interests of the shareholders.

Trustees and executors manage assets for beneficiaries and have a duty of absolute care to them.

As the Royal Commission continues, it is important that persons in these positions of responsibility be vigilant to ensure that no such practices have caused a loss to the relevant company, trust or estate.

The banks are not infallible

In a case from earlier this year, Public Trustee v CBA & Ors [2018] SASC 25, the Commonwealth Bank of Australia and Bank of South Australia were found to have paid $177,000 from a deceased estate to a person who was not entitled to it. The Court held that would not have occurred had the banks acted prudently and conservatively.

This follows a matter which we ran in the Superannuation Complaints Tribunal on behalf of an individual who claimed that Colonial First State paid $460,000 in death benefits to the wrong person.

Our client was successful and Colonial was ordered to make another payment of $460,000 but this time to our client.


The important lesson for directors, executors and trustees (or even administrators), is that these financial institutions are not immune to misconduct or mistakes.

Where that has occurred resulting in a loss to a company, trust or estate, it is up to those in charge (the directors, trustees or executors) to act in the best interests of the members or beneficiaries and seek to have the matter rectified.

You can expect that financial institutions will fight tooth and nail before admitting any misconduct or error, but if the loss suffered is significant and the director, trustee or executor does nothing about it, they could potentially incur some personal liability.


More allegations of misconduct by financial institutions can be expected as the Royal Commission continues.


This publication covers legal and technical issues in a general way. It is not designed to express opinions of specific circumstances. It is intended for information purposes only and should not be regarded as legal advice. Further professional advice should be obtained before taking action on any issue dealt with in this publication.

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).


Stay in the know

Get our latest news and publications delivered straight to your inbox

  • This field is for validation purposes and should be left unchanged.