THE Australian Securities and Investments Commission has reopened potential compensation claims for 4000 clients of Commonwealth Bank of Australia’s financial planning division after finding fault with the way the nation’s biggest bank handled the original process.
The corporate regulator has imposed new licence conditions on two of CBA’s financial planning businesses that will involve “significant further work’ on the compensation process and face independent monitoring.
ASIC chairman Greg Medcraft said he was “extremely disappointed’’ that compensation measures put in place for clients of Commonwealth Financial Planning Limited and Financial Wisdom Limited were not applied to all customers.
The two businesses failed consistently to apply compensation measures including upfront communication with affected customers of advisers where there were concerns about the quality of advice and the offer of $5,000 to customers to obtain independent advice on their situation.
The regulator’s action reopens a long-running saga for the bank nearly six months after the expiry of enforceable undertakings imposed because of client losses caused by over-aggressive and inappropriate advice given to clients by financial advisers Don Nguyen and Anthony Awkar.
ASIC said the compensation measures had not been applied to clients of other advisers about whom there had been concerns.
More than 7000 files were reviewed and compensation paid to more than 1100 customers. As a result of the ASIC action another 4000 customers will have the opportunity to reopen potential compensation claims.
ASIC’s handling of the investigation — which included long delays in responding to whistleblowers within the bank and the loss of a written whistleblower complaint — provoked a senate inquiry that is due to report next month.
CBA said it “deeply regrets’’ the advice failings but that it was a “now a significantly transformed business’’.Author : ANDREW WHITE
Source : The Australian