In an open letter to CBA chief executive Ian Narev, Bluepoint Consulting director Tony Bates called on the bank to establish “a trust fund”, similar to the James Hardie compensation system.
“You are the CEO of Australia’s biggest bank, Australia’s most substantial wealth manager and adviser,” he said.
“You have a responsibility to Australians who look to us in the financial services industry to provide for their security and comfort in retirement.
“Come on. Establish a trust fund today for victims, like James Hardie did. Why not establish it by setting aside one month’s profit or $750m?” he asked.
Mr Bates’ letter follows the release by Promontory Financial Group – appointed by CBA to oversee the ‘Open Advice Review’ program in August 2014 – of the second report outlining the program’s progress.
According to the report – which reviewed a sample of 208 client cases – as of 30 April 2015 the bank has made a total compensation offer of $562,513 to clients affected by poor advice, but has only paid $79,702 to five clients.
Of the remaining $482,811 the bank has offered, a total $248,307 is still under review by the customers and the bank.
The remaining $234,504 has been accepted although it is still yet to be processed by the bank.
Promontory’s report also stated that six of the 208 client files reviewed, despite their being found to be poor, were not offered compensation because no financial loss was suffered.
The report also stated that 174 client files reviewed were found to be offered “appropriate advice”.
CBA said since the initial report released by Promontory in December 2014, the bank has received an additional 17,774 customers expressing interest in the program, with approximately 7,000 confirming they want their advice reviewed.
CBA probably has liquid capital of a few hundred billion. Why does it need to establish a trust fund? It’s not like the compo is going to make CBA insolvent.
Why has he just targeted the CBA – I think that Macquarie should also be in the spotlight as they self insure which would mean that they would make it doubly hard for anyone to get a payout from them. It also means that anyone fighting for a payout will need to take on Macquarie – something not many would want to do given Macquarie’s deep pockets
What a clown. How many people does he expect this to impact that the financial loss will amount to more than $750? More importantly, what purpose does it serve to set aside those funds? Is he concerned that the CBA will up and close its doors due to needing to compensate recipients of poor advice? Is the financial stability of the bank at stake from this? Is insolvency imminent? These clients aren’t even going through the courts for gods sake.
Scraping the barrel for commentary IFA.