all a terrible misunderstanding .....
The Commonwealth Bank has been forced to reopen its compensation process for victims of shoddy financial advice provided by two of its planning businesses.
More than 4000 customers of Commonwealth Financial Planning (CFPL) and Financial Wisdom will now be able to apply for compensation under new licence conditions imposed by corporate watchdog the Australian Securities and Investments Commission.
The decision comes after a joint Fairfax Media and Four Corners investigation into the two groups revealed that compensation payments to customers of planners in both divisions were not given the same treatment.
ment ASIC has also admitted giving inaccurate testimony to a Senate inquiry into its performance over the financial planning scandal.
In a statement, ASIC blamed the bank for leading it to mislead the Senate, saying it sourced its information from CFPL's submission.
The CBA said that on Friday it gave the senate committee ''additional clarity on its submissions''.
The bank previously told the inquiry that compensation of $51 million was paid to victims but failed to make it clear that, in addition to CFPL customers, that number also included $7 million paid to customers of Financial Wisdom planner Rollo Sherriff.
Senator John Williams, who is leading the inquiry, said he commended ASIC for its decision to act swiftly on CBA.
He said all clients should have been treated equally when it came to compensation payments. "ASIC has done well acting on the issues once it was in front of them and I encourage CBA to treat clients who have been wronged by poor financial advice to be properly compensated,'' he said.
ASIC said the two planning networks would be required to ''undertake significant further work in relation to the compensation process for customers and will put in place independent monitoring of that work''.
It said some clients had been ''disadvantaged'' because the CBA's compensation program ''was not applied consistently across all impacted customers of the two businesses''.
ASIC said customers of two top CFPL planners, Don Nguyen and Anthony Awkar, had been treated correctly in the compensation process.
The regulator banned Anthony Awkar for life after he was found to have forged client signatures.
He worked for CFPL from May 2008 until June 2010.
Nguyen, who worked for CFPL from 2003 to 2009, was banned for seven years.
ASIC chairman Greg Medcraft defended the bank's compensation scheme but said it had not been properly implemented.
''The compensation process originally developed was carefully designed to include a range of measures to protect the interests of customers involved,'' he said.
''ASIC is extremely disappointed that not all of those measures were applied to all customers.
''We are now taking immediate action to remedy the inconsistent treatment.''
The senate inquiry into ASIC's performance was sparked by the regulator's delayed response to information about a cover-up in CFP, which saw hundreds, possibly thousands, of clients lose millions of dollars.
Jeff Morris, a bank whistleblower, has been agitating for the Senate to reopen the bank's compensation scheme to ensure all clients of CFP and Financial Wisdom were properly compensated.
He said it was ''ludicrous'' that only 7000 client files were investigated by the bank, and of those, only 1127 clients received compensation.
So, having been dragged kicking & screaming to the scene of the crime, ASIC Chairman Greg Medcraft has finally acted to ensure that the Commonwealth Bank will take steps to compensate all of the victims of its organisation’s criminal behaviour.
Now that’s been sorted, perhaps Mr Medcraft may find time to initiate criminal proceedings against those responsible for this outrageous financial scandal, including those at board level who are ultimately accountable for constructing a culture that rewarded dishonest behaviour?
Don't hold your breath.