In his opening statement to a parliamentary committee in Canberra this morning, CBA chief Matt Comyn conceded that Australia’s largest and most profitable bank has been “too slow to identify problems, too slow to fix underlying problems and too slow to put things right by customers.”
“Our customers and the community rightly expect that we always do the right thing. But we have seen far too many instances of unacceptable customer outcomes. As the royal commission hearings have shown, there have been failures of judgement, failures of process, failures of leadership and, in some instances, greed,” Mr Comyn said. “We became complacent.”
His comments come after CBA this week revealed plans to overhaul its wealth management processes, including changes to remuneration practices. CBA will rebate grandfathered commissions and any fees charged for no service to customers.
Earlier this morning, Mr Comyn was asked by the committee’s deputy chair, Labor MP Matt Thistlethwaite, how an organisation with some of the highest paid senior managers in the country managed to get itself into a situation where it has become so tarnished and damaged.
“[Executives] of this organisation who were being paid big bonuses were alerted to some of these issues over eight or nine years ago but they didn’t act. You didn’t act until the regulators got involved, the media got involved and the royal commission delved into them. Why should we accept now that things have changed when you have had a decade to get them right and you didn’t?” Mr Thistlethwaite asked.
Mr Comyn said he understands the community’s scepticism. He accepted that CBA was wrong to oppose a royal commission.
“We did, as an organisation, become complacent. We made too many mistakes. We were too slow to acknowledge and get to the root cause of those mistakes,” he said. “Success dulled our senses.”
More to come.
Matt stop being gutless. Be a man and refund the MER.
Start with making the CEO and Management at Count over the last 5 years accountable for their Countless greed and shocking actions and throwing advisors under the bus! Oh the stories I could tell…
Dear Mr Comyn,
There is at least some semblance of contrition in these comments about complacency and mistakes.
However I can’t foresee very much changing as the “root cause” of your problems is not just greed. It is because, fundamentally, your AFSL Executive Team, and your Advisers, are on opposite ends of the football field.
1. Have a really good look at your Management Team. Far too often, these employees of yours have no advice experience or any actual superannuation education qualifications. How then are they really equipped to “manage” Advisers who are about to enter a 5 year transitional period of higher professional standards?
Unless and until your Management Team are suitably qualified and licensed, the same as your Advisers on the ASIC FAR, nothing is likely to change. If your Management Team was qualified and licensed, let me tell you you would have far fewer cases of bad advice as Management would be accountable as their Representative status would always be at risk.
2. Using your own Platform service to vacuum up superannuation (and direct the cash component to your treasury) is not giving advice. Products are the last, not first, decision an Adviser needs to be concerned with. So you are probably going to have to be comfortable with your Advisers using competitors products (at least some of the time) if you are going to be in the advice business.
I will be watching what happens over the next while with great interest.
Regards,
Tony Rigg, our case goes back 33 years and we like others were never in default, google Tony Rigg vs Commonwealth Bank, we had a simulated foreign currency loan, simulated means counterfeit which means fraud, read our case cand make up your own mind. I just received a FOB OFF letter from Matt Comyn, no time limit exists on FRAUD/ CRIMINAL ACTIVITY.
Some financial planners have made a conscious decision when it comes to the selection of a licensee that these firms will be their business partners at the licensee level.
When it comes to over regulation and Government intervention there are not many things we advisers can control. The selection of licensee’s is something we can control. If we want to reduce costs, paperwork, Government intervention is this an area we should be thinking about? Should professional associations have these business relationships? I say no. Personally I think we should move away from the commission, versus asset based fee versus flat fee debate as so long as it’s declared and it’s the best method for the client then what does it matter…and move onto putting these relationships under the microscope. A discussion that product manufacturers don’t want us to have.
Fine with asset based fees but disagree regarding commissions (excluding risk) and grandfathering. While these conflicts remain, fees for no service and the trading of client books like commodities will remain.
Honestly reminds me of the Aus Property market. So many advisers leverage into books and take on amounts of clients they know they could never actually service if they were subject to opt-in etc. The house of cards is crumbling. Those who will remain will be those who add value to clients, no longer can a ”successful” business be built on buying books over organic growth.
Reality, you need to keep up – the debate on “conflicts” remain I believe is over. See what the Banks will be doing (below) taken from IFA article “Banks vow to stop charging dead people”.
i suspect the product providers (Trustees) will be contacting the clients (yours and mine) each year to see what services they require. How are you going to justify your fee to the Trustee if the clients states they don’t need any service? If the clients needs service, you really believe the Trustee (Product Provider) will refer the client to you?
The Banks will also get moving in the “look-back” (please read ASIC report 515) which is really only going to impact on Financial Planners as it is all about Adviser Fees – not the product fees.
Lets say your with a dealer like AMP etc and want to leave – taking the FUM with you. Do you really believe the dealer will not find a way to stop you – like an Audit and 10 year look back ASAP?
But hay, your worried about conflicts.
• Ending ‘fees for no service’ – Banks will change the way they manage ongoing financial advice, proactively contacting customers to confirm what advice is required and only charging for what is provided.
• Changing the Banking Code of Practice to improve the way banks manage a deceased estate – Once notified of a customer’s death, banks will proactively identify fees that are for products and services that can no longer be provided in the circumstances, stop charging those fees and refund any paid.
• Seeking new legislative changes to the Future of Financial Advice (FOFA) reforms to remove all legislative provisions that allow grandfathered payments and trail commissions in financial advice.
I agree with you on the commissions front, but I think that there is still a market for buying businesses that have a client base with a similar investment offering to your firm. If you have the capacity to service the client base without draining your resources too much, the free cashflow is very strong.
Same approach as most witnesses to the RC. Concede to the allegations and tell them exactly what they want to hear. Anything else is futile and risks further bad PR.
Unfortunately this approach doesn’t help to differentiate the specific problems needing attention, from the parts of the system that are working just fine. It will inevitably lead to a massive increase in “risk management” and compliance bureaucracy that ends up making things worse for most consumers. Anyone tried to get a loan recently?
Yeh but wait – it was all the Financial Advisers fault – blame the Financial Advisers, they need FASEA, they need more red tape and regulation, etc, etc, will likely be the result.
For once the CEO’s and Managers have to pay, not the low hanging, easy Financial Adviser targets.
These CEO’s and managers have blatantly thumbed their noses at the law and behaved criminally and [b]they need to be banned and held accountable !!!!!!!!!![/b]