Adele Ferguson Sydney Morning Herald Business Day 22 October 2013
The country's biggest bank, Commonwealth Bank, has been paying banned financial planner Don Nguyen an income of tens of thousands of dollars a year through an insurance policy since he resigned in 2009 amid an investigation into his conduct that cost the bank tens of millions of dollars in compensation.
The revelation into Mr Nguyen's ongoing payments comes as a Senate inquiry into the performance of ASIC is expected to call up some former and current executives at CBA, including Mr Nguyen.
A number of CBA executives knew what was going on inside CBA's planning business but attempted to cover it up. These executives have never been punished. Some continue to work at CBA or are now working at a stockbroking outfit in Sydney, and other banks.
The bank's life insurance arm continues to pay 75 per cent of his income, which means payments are worth an estimated $70,000 a year, despite at least five of his clients still waiting to be paid compensation.
The revelations that Mr Nguyen is still receiving income from the bank were made in response to a series of questions from senators Doug Cameron and John Williams to ASIC that have just been published.
"CFPL [Commonwealth Financial Planning] reviewed all of Mr Nguyen's client files and determined to pay compensation to 201 clients on the basis that they had suffered financial loss as a consequence of inappropriate financial advice," ASIC said in response to a question on notice.
A Fairfax Media investigation in June revealed that the bank became aware of Mr Nguyen's transgressions in 2006. He had 1300 clients and managed up to $300 million of their retirement savings. He was suspended for a month in 2008 and despite an internal investigation uncovering evidence of serious misconduct, including charging excessive fees and paying kickbacks to staff members for referrals, he was promoted. He was allowed to resign in 2009.
After he resigned he started to claim a benefit under a CBA Income protection policy of 75 per cent of his salary. He continues to receive income from CBA’s life insurance arm CommInsure.
Mr Nguyen is one of seven CBA planners banned from the industry for misconduct. Nguyen was banned for seven years in March 2011, more than two years after a group of CBA insiders known as the "ferrets" informed the regulator ASIC about his misconduct.
According to ASIC there are still five clients yet to be compensated.
ASIC said it was not aware that Mr Nguyen was being paid an income benefit during his Administrative Appeals Tribunal determination, where he was banned for seven years. It said it became aware of this in August 2012.
In late May, Fairfax Media wrote to CBA asking if Mr Nguyen was being paid income protection. A spokesman at the time said: “We cannot comment on the details of any of Mr Nguyen’s personal insurance arrangements. He no longer receives any payments as an employee of the group."
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