Earlier this week, CBA denied claims that one of its bank staff members had provided bad personal advice to Raymond Kataryna, who passed away last year.
Mr Kataryna had sought compensation from CBA after he lost thousands of dollars as a result of putting a $500,000 cheque into a cash account, instead of his superannuation.
He had claimed he was recommended the asset allocation. But CBA denies this, saying Mr Kataryna himself had directed the move.
Now, Mr Kataryna’s estate is set to involve plaintiff firm Shine Lawyers to try and get back what was lost, said Melinda Houghton of Houghton Strategic Solutions – the family’s financial adviser.
“We lodged a claim with FOS in 2014 because Mr Kataryna had gone into his branch to see his financial adviser. He was told his financial adviser wasn’t available and he could talk to another one,” Ms Houghton told ifa.
“From there he was encouraged to put money into a bank account instead of the superannuation fund that his adviser had previously recommended. What that meant was that he lost a lot of money in capital gains tax and also in lost income from Centrelink.
“The bank is saying he didn’t see a financial planner on that day. [Mr Kataryna] was arguing he was told he was seeing a financial planner that day.”
Ms Houghton said Mr Kataryna’s attempts to resolve the issue via CBA’s Open Advice Review program were being blocked due to insufficient paperwork.
CBA said earlier this week that there is no record of personal advice in this case because personal advice was never provided.
Ms Houghton said she cannot see how this is possible.
“How does a bank, a financial planning arm of a bank, have absolutely no records of a client? None? And how do they use that as saying he didn’t receive advice when he clearly did?” she said.
“My concern is that this is just one client. They’ve recently stated that ‘over 80 per cent of the customers who have had advice assessed through the Open Advice Review program, we have provided reassurance that the advice they received was appropriate for their circumstances’.
“My question would be ‘how many of those just didn’t have any records?’”
The headline of this article has been amended to more accurately reflect the story
Melinda, I am guessing you’re regretting making this a story with the wasted time writing replies here etc.
Generally when you post in comments in other articles on IFA I agree with your opinion, but in this situation, it almost smacks of either naivety on your behalf or even a little bit of ambulance chasing (sorry I know that sounds harsh but it does come across somewhat like that). I am sure there is a whole level of other information you can’t put on here, but on the surface, it sounds like a sketchy sob story by a person out to get something from the bank.
Even the fact that this IFA epublication changed not only the title of this story, but from recollection also parts of the body text (I may be mistaken, but think not), is somewhat dodgy in nature.
Call me a cynic!
Good work Melinda, it is unfortunate that we as advisers have to clean up the Banks mess over and over again.
Really? Well then, I guess I didn’t just spend a ridiculous amount of my time and energy giving advice to a client on what to do with the extremely expensive and completely unnecessary SMSF my client’s accountant and independent adviser put her in (complete with an expensive wrap holding a bunch of pretty ordinary shares), which she had absolutely no understanding of, or need for, and bears the liability and responsibility of! But hey, I guess I’m happy to spend my time cleaning up IFA messes over and over again if it helps my clients.
Of course, you could always try removing your bias and understanding that ‘we as advisers’ are all in it to help clients regardless of who we are employed by. But I somehow doubt you’re capable of that.
Cleaning it up? But it’s a legal matter? No amount of financial advice can represent you in a court of law… It is outside your authority and expertise.
Unless you are licensed and qualified to provide legal advice???
Ask your licensee if you are covered on their PI for it…
And mate, most of the complaints the bank had were generated from a review of their own clients by them.. Yes it’s a mess but saying the IFA are cleaning it up is hyperbolic rubbish.
Interesting that many of you seem to think the client should know the workings of how advice should happen. It worries me that a naive client can be treated as poorly as this, the Open Advice Review Program and FOS can acknowledge that CFPL do not have any records, but some of your comments seem to indicate the fault is with the client for not knowing how things “should” work.
Reporters cannot include 2 inches of paperwork in an online article, they have summarised.
I have put a lot of time and effort into helping this client and now his family. He has been treated poorly, CFPL have NO records, and the family want people to know that this should not be an excuse.
It should not be up to any client to know how FP works, how tax works, how banking works. The client seeks advice and should be treated with respect. It is the service providers responsibility to keep records, ensure the client understands the process, and is treated well. This did not happen in this case.
I understand your feelings, Melinda. But I think the point many are making is that it is the individuals responsibility (with guidance from family if his understanding / language etc causes any uncertainty) to ensure they do the best for themselves. IF he was told to go back to a person for advice when the property was sold, so as to use super to reduce tax. The cheque would need initial banking, but that seems to be where it stopped.
Could you please put a link up to the FOS determination Melissa.
Are the FOS determinations public? If so where?
I thought all determinations were public and searchable on the FOS website..
Is it Professional and ethical to be discussing a client and their details on line…
If it is, is it best practice.
I’d say no..
The family has specifically requested this happen due to the lack of appropriate response to the case. They also wish other people who may be having the same issue to become aware they are not alone. This complaint has now been going on for four years.
Maybe the family should be the ones making press releases under advice from their lawyers would be more appropriate route for them to get the right info out to the market.
I don’t disagree to this being in the public arena but I don’t agree that you should be doing it for them as a professional planner while it is still going through legal avenues.
If this is going to litigation, I’d strongly suggest not divulging the details in case they contradict the statement of facts! I feel for the family, but with absolute respect, I suspect honest naivety may have come into play. To my knowledge, there is no such thing as ‘cash investment targets’ in the retail space, and in fact zero incentive for teller staff (or an adviser) to receipt cash (Tellers may correct me if I’m wrong). Different story for originating financial products (mortgages, CCs, Insurance etc). My hope is that the right outcome is achieved (i.e. a fair outcome based on the facts) and suggest the family exercises caution when dealing with the likes of Shine Lawyers – Their business model preys upon your very situation. Check your pockets every time you walk out of their office. Best of luck.
Thanks Timbo, Shine Lawyers are one of the Open Advice Review Program advocate Lawyers, and costs are met by the CBA.
I have worked for a big 4 bank, and they certainly do have targets to meet, particularly for funds going into new accounts (whatever the focus is at the time, eg CMA, term deposits etc. )
This client had a new account opened for him on the day.
Tellers and Bank staff absolutely do have targets to put funds into new accounts. As an ex staff member I have witnessed staff being screamed at by management for not meeting their targets.
(Mods – not sure if my previous comment went through, so I have reduced its size, thanks) So, what records did Mr Kataryna have from his 7 year FP relationship? Did he really see 3 – 4 planners regularly over the years and not have anything. Did he have specific instructions from his Accountant saying how much to put into super as a deductible contribution (which would have been limited) and if so, why did he meet with / be directed by someone new? Importantly, what was the verdict by FOS? There seems to be quite a few holes in this article and more facts after the event. I agree, it is open season by lawyers to try and blame everything on banks/Planners rather than take responsibility. Melinda, how much did Mr K personally provide to you in documentation and clear explanation of what happened? Or has it all been provided by others? Just curious. Thanks
Of course this article is a short version of events. We have about 2 inches worth of paperwork in relation to the case. Some provided by him, and most from the product provider. Obviously I would not have been fighting for him for 4 years without evidence. His financial adviser discussed the contribution with him, and told him to come back for more advice when he had the cheque.
He was referred to me in the next financial year and it was too late then for my advice or his accountants actions to do anything. He moved to my practice due to his dissatisfaction with the advice being provided by CFPL, when I then identified many issues. We then lodged a claim with CFPL. They said they hadn’t been advising him, just meeting with him regularly. He says that the advisers took notes at every meeting, however CFPL cannot find anything at all, even though they have acknowledged the conversations and meetings happened.
He did not know about Financial advice report & record keeping requirements, he was a client, not an adviser. He received ongoing statements with his advisers name on them and thought when he was seeing his adviser he was receiving advice.
So, what happened with FOS? I’d guess that there were no previous SoAs, just ‘product providers’ statements so they may have rejected it? The super fund would not accept a cheque made out personally and was he really putting $500k into super? It seems the follow-up appointment with the actual Planner spoken to did not happen, let alone speaking to an Accountant after being alerted to the CGT liability. These things do put a bit of the onus back onto the customer, even though yes, they can’t be expected to be aware of the regulations.
FOS made a determination in favour of the client overall with a small amount payable. However the onus of proof was on the client, and as the bank had NO records at all, they simply denied they had provided advice despite acknowledging client meetings and products.
It appears convenient that hundreds of complaint client records (Open Advice Review Program) have gone missing don’t you think?
So is this incorrect????
Gamertsfelder also cited a review of the case conducted by the Financial Ombudsman Service in 2012 which found in favour of the bank.
There were a lot of issues covered in the FOS case. The overall determination by FOS was in favour of the Applicant.
Tim, you have a good point. The client sold the investment property and would have been presented with a check for the difference in his own name. He would have then gone to the bank to make the payment to his superfund and would have been told it had to go into an account in his own name.From there he would have been able to make a contribution to super…this second part didn’t happen…
I doubt very much this happened and almost feel sorry for the bank. The bank would have been salivating to get a hold of his money and load him up in a suite of expensive CFS products on the CFS platform, with advisory fees on top. If, however, product distributors and manufacturers were precluded from operating ”advisory” services, then there would have been zero room for confusion of what actually occurred here. Same old problem. Same basic solution. It isn’t rocket science.
You are correct that a part of the problem is vertical integration.
Just a question though ? Have you ever worked in a bank branch and had to meet cash investment targets?
Massive pressure to reach them, you are nearly there and then a $505,000 cheque walks through the door?
Just one possible scenario.
Yes, I have worked in a bank branch and had no such target or pressure as you describe. As a teller, if a customer has a cheque to bank, you ask what account to bank it into. You don’t stand providing/not providing personal financial advice. If you did, the queues would be out the door.
Something does not add up in this story….
Clearly you never worked at CBA!
Real world get a grip. Naive statements bordering on downright silly – as a bare minimum, you contradict yourself. You doubt this happened, as the bank wanted his money for their super fund, (so if they did get it, the problem wouldn’t have happened, right?) and yet, they should be precluded from advice because of…what exactly? I missed your point if you had one,
Obviously, this could have happened regardless of whether or not the bank were ‘allowed’ to provide advice.
I am an IFA but realise that the banks have a role to play in our industry, and as much right as any other group to provide products and services; this isn’t a communist (union) block yet.
We do product reviews all the time, and your statement ‘expensive CFS products’ indicates your bias, as they are pretty mid range, and lower than many ISA funds depending on how they are used.
I gather you’re an ISA advocate or ‘planner’, if you can use that term in good conscience being limited to one product. By your own trail of (il)logic, product providers like ISA funds should not be allowed to provide advice due to conflict of interests.
How do you lose a lot of money in capital gains tax with a bank deposit investment? Does Ms Haughton understand the concept of CGT and the assets that are affected in their respective circumstances?
If the market had moved in the opposite direction would the family have sued for not benefiting in the reduction of the capital value. Tell ’em that they’re dreaming and go away. Gosh, some people are so greedy and cannot see the light beyond the trees
Thanks Devil’s advocate for your opinion. CGT was on the sale of an invesment property. Funds were to go into an existing super fund managed by planners at CFPL, with a concessional contribution to minimise CGT, but didn’t based on what the client considers to be advice on the day. The adviser had already discussed this strategy with the client but wasn’t there that day.
The planner wasn’t there that day, but it didn’t occur to your client to wait a day until they were there? And they had (allegedly) an ongoing advice relationship with that planner? They just decided to take advice from some nameless bank teller who they didn’t know from a bar of soap? Wow…. that’s gullible… when I’m not available, my clients know to make an appointment to see me on a different day. Or they email or call my mobile….
Don’t you know? if it is an allegation against a financial planner. there is no evidence required. The planner is presumed guilty, unless, proven innocent. Afterwards, they are left with their reputations tattered and no one has to compensate them. Financial planners are sub humans who deserve to be treated with indignity.
Planner was on extended leave for 6 months. Good point but he says he was told he was speaking to the new planner. He had already been moved around to 4 planners, and didn’t see this as that unusual.
The expression is “can’t see the Wood for trees” that said i agree with your sentiment.
just try not to mix your metaphors 🙂
“he lost a lot of money in capital gains tax” ….. on a bank account? What am I missing that Ms Shine the lawyer is going to recover for her estate? And a teller has no obligation to act in bests interests of client – all they have to do is explain the product and its up to customer to make decision. They cant mislead of course.Though I went to the CBA to help with a estate account and was told “we dont open accounts for dead people” so no level of ignorance in a CBA branch surprises me.
Client sold an investment property. Had already discussed with his financial planner that a super contribution would minimise CGT. Planner told him to come back when he had the cheque. When he went back with the cheque it was instead put into cash on advice from the “apparently non-existent” fill-in adviser.
So the sale of investment property is what I was missing.
was there an SoA stating the agreed plan?
Are you also seeking recompense for diferecne between cash earning rate and the notional return on some % of growth assets? Ie the opposite of moast claims against CBA that asset profile was too aggressive.
Surely this would have involved an Accountant at some stage, wouldn’t this bring to light discrepancies prior to this with his record keeping regarding CGT issues?
There is a lot more involved obviously. However he was told to come back for advice when he had the cheque, which is what he did.
He was told to come back for advice from HIS planner – not just a planner (or a bank teller who was perhaps mistaken for a planner). A planner who would undoubtedly have done a statement of advice if advising on a contribution and tax minimisation strategy. And yet, the client doesn’t have an SOA by the sounds of things, and decided that he’d just go ahead and bank the cheque! Wowsers… I get that people aren’t fond of banks, or bank planners, but this just seems to be pretty far-fetched. And clearly FOS thinks so too. The whole story smacks of vexatious litigation on the grounds that the bank has deep pockets and everyone can make some money here.
As I mentioned above, you expect the cheque was made out to the individual so would need to go into an account first before then contributed to super.
What a joke – it seems like its open season on the Banks yet again and the lawyers are cashing in. If this client was referred to a Planner, he would have received advice, but because he wasn’t his estate are now going the banks, alternatively If the bank staff had referred – I am sure the media would have said its because the staff member is incentivised – give me a break – people need to start taking more responsibility for their actions and stop bashing and going to the media and lawyers when things go wrong. Its this sort of rubbish that the regulators love as it means they are kept in a job and add more paperwork, documentation rules etc which will only add to the cost of advice and we will see much more of this type of complaint
The client had a financial planner at the branch, and he was on leave. He was told he was seeing another financial planner at the branch. He saw his financial planner regularly over 7 years, however the bank have admitted they have kept no records. He also paid fees to a financial planner. NO records at all despite providing a product, rolling over super funds and paying fees.
Are we understanding this correctly, Melinda? He had been dealing with an FP at the bank for seven years and they have NO record / Client File of him yet he was paying them a fee (to the same adviser)? If this is the case this is indeed a massive breach of providing advise without the necessary SOA’s which you might have expected especially since the client seems to think his (previous) adviser provided advice to place the property proceeds into his super.
You are now understanding this correctly Gav. 3 or 4 advisers over the years attached to his account, but was seeing them all regularly. CFPL have NO client file, NO electronic file, NO file notes, NO SoA, NO Fact Find, nothing. Advisers have admitted meeting with him many times, admitted discussing the property sale and super contributions, made transactions for him, he paid initial and ongoing rollover fees of 2%, the advisers names and signatures are on the application and withdrawal forms and on his statements. Now do you see why we have a problem? Complaints have been going on for 4 years now.
It looks as though they are suggesting he was never a client. This will be hard for CBA to explain imho as how do CBA charge fees initial and ongoing without disclosing these in the appropriate format and taking him on as a client. Something is very wrong here.
Um, is it possible that the file did exist, along with all those documents, but it has been misplaced? I get that this wouldn’t be ideal, but I think we can all agree that nobody’s perfect and it’s more likely that a file has been lost than that 4 advisers in 7 years somehow failed to record any documents for this client. And in any case, wouldn’t the clients have records from his meetings? Not sure how you’re doing it, but I make sure my clients have copies of their advice documents and ask them to make sure that they keep them in a safe place at home and refer to them if they need to.
All we know is that CFPL says they cannot find any records. The Open Advice Review Program says there are hundreds of clients in this position, where the adviser/advice provider has no records.
Most advisers do as you have recommended and tell clients to keep records, however it is also our responsibility to keep records for 7 years after the advice relationship has ceased.
How does someone with $500,000 to invest, a current relationship with a FP, then confuse a bank teller for a financial adviser? I find this strange. But it wouldn’t be the first time a teller has suggested putting superannuation money into a personal account.
Correct Gav, very strange. However the CBA have refused to check their records in this case to see which financial planner was working in the branch that day. The client believed he was speaking to a financial planner.
Everyone loses when people try to blame the deepest pocket they can find for their own poor decisions. Everyone knows that bank tellers are not financial advisors.
Everyone also loses when people posting under “Anonymous” make judgements without knowing the facts of a case too. The client states he was taken to a separate office, spoke to a fill-in financial adviser, as his was away, and the teller just processed the transaction.
So someone with an ongoing advice relationship sat down and took advice from a perfect stranger rather than wait to see their own?
And as for posting anonymously, well, perhaps some of us aren’t out to self promote at every available opportunity by plastering our name all over cases against like this.
I agree & and maybe we are afraid of tarnishing our good reputation built over nearly 20 years and maybe we are afraid of retributive justice if we did post our names