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BFCSA: Senator Bishop telling ASIC to get a move on re Commonwealth Bank. Lying to the Senate? 60,000 CBA clients at risk.

Posted by on in ROYAL COMMISSION URGENT
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For Consumers dealing with ASIC, its fraught with TENSIONS AND FRUSTRATIONS.  Senators exasperated by the same mumbo jumbo from ASIC luminaries.  Our Members have all been down that road!!!!  ASIC has no idea what "critical risk" is in relation to consumers.  It will protect our wretched and deceitful Bankers at any cost.   COST of ASIC's do nothing approach being $400 million per annum.........................great protection racket!   Is it any wonder that ASIC is now the subject of the Senate Inquiry into the regulators own nefarious activities.    This email address is being protected from spambots. You need JavaScript enabled to view it.

http://www.smh.com.au/business/cba-faces-broader-compensation-payouts-at-asic-inquiry-20140605-39lx5.html

CBA faces broader compensation payouts at ASIC inquiry

BusinessBanking and Finance

June 6, 2014 Adele Ferguson

 

In another twist in the Commonwealth Bank financial planning scandal, Senator Mark Bishop asked the corporate regulator to consider imposing further conditions on the bank's licences to force it to broaden the compensation program to the customers of financial advisers who had been identified as a ''critical'' risk "at any time".  Senator Bishop asked the regulator to also consider imposing a condition on the bank's financial planning licences that all the clients of financial advisers who "worked with, under, or above Mr [Don] Nguyen and Mr [Anthony] Awkar" have their file histories reviewed and recommendations made by an independent expert appointed by ASIC, not the bank.

ASIC agreed to consider the question.  If ASIC decides to impose these new conditions, the bank could challenge them at a hearing or agree.  If the new conditions are breached it could face suspension or cancellation of the bank's licences in its financial planning arms - Financial Wisdom and Commonwealth Financial Planning.   Tensions between ASIC and CBA became strained after a series of incidents in the past couple of weeks including misinformation supplied to the Senate and revelations that clients had not been treated equally when it came to compensation payments. ASIC responded by imposing new licence conditions on the bank two weeks ago. 

Senator Bishop, who is chairing the Senate Inquiry into ASIC and the bank's financial planning arms, said in all his years in public office he had never been in a situation at the end of an inquiry where he didn't have a clear view of the outcome. 

''I continue to be much troubled by this inquiry because I am unclear what has occurred,'' he said.

It comes after the Senate was told that between February 2007 and February 2008, ASIC undertook an extensive surveillance of Commonwealth Financial Planning Limited and reviewed 496 pieces of advice provided by 51 advisers. ASIC concluded that the quality of advice and standards of practice were ''unacceptable''.

ASIC identified significant concerns in relation to supervision, file review procedures, advice templates, breach reporting, record keeping and compliance, and significant and widespread problems with the quality of advice.

CFPL had over 750 representative advisers and has an estimated 300,000 customers. Fairfax Media has requested CBA supply details of the number of planners across its Financial Wisdom division.

CBA has written a 27-page letter to the Senate inquiry in relation to questions about compensation. Its contents remain confidential.

In February 2008 - eight months before the whistleblower warned the regulator about a cover-up inside the bank with ''sanitisation'' of files - ASIC wrote to Tim Gunning at CFPL and advised him of ASIC's findings and concerns.

The letter mentioned 38 advisers were ''critical risk'', as categorised by CBA but it pointed out serious deficiencies in CBA's ability to properly rate its advisers. ''Our review of advice given by representatives that were rated as Negligible identified significant issues that we would not consider negligible,'' the letter said.

Of 38 representatives rated ''critical'', CBA revoked the authorisation of only 12 representatives. A ''critical risk'' adviser can include ''fraud and dishonest conduct'', ''deliberate or reckless failure to disclose fees, costs, charges, relationship and warnings'' and ''no evidence of appropriate advice''.

Given this systemic cultural issue inside the bank's financial planning divisions it is no surprise that Senator Bishop questioned the compensation scheme and asked why ASIC hadn't gone after 26 ''critical risk'' financial advisers that had been identified by the bank when it was doing surveillance in 2008.

 

Whistleblower Jeff Morris said: ''This letter is the smoking gun in the ASIC inquiry. It shows unequivocally that ASIC knew full well in February 2008 that the clients at Commonwealth Financial Planning and Financial Wisdom were receiving appalling advice that did not comply with the law, let alone good practice. In fact the letter shows that this was the case for more than 50 per cent of clients.''

 

''The implications for reopening the compensation scheme are massive. Even ASIC's complacent observation that they knew in 2006 that 20 per cent of the advice across the financial advice industry was bad would imply that 60,000, not 7000, of CFPL's 300,000 clients should be compensated,'' Mr Morris said.

Read more: http://www.smh.com.au/business/cba-faces-broader-compensation-payouts-at-asic-inquiry-20140605-39lx5.html#ixzz33vEYMRgl

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