In its interim report, the Senate Economic References Committee also highlighted the “toxic” nature of Commonwealth Financial Planning’s sales-based culture.
One of the key cases being examined by the committee is the conduct of financial planners in CBA dealer group Commonwealth FP (CFP), as well as ASIC’s response to the allegations of wrongdoing.
“A number of former CFP clients provided evidence that indicated that they had suffered significant losses because of the conduct of some unscrupulous advisers,” said Senator Mark Bishop in the interim report.
“[The former clients] spoke of being bullied by CFP/the CBA, and described the stress and uncertainty that they and their families suffered as a result of misconduct at CFP,” said Mr Bishop.
“The inquiry raised questions about CFP’s sales-based culture, which was described as ‘toxic’ at a public hearing. Allegations of forgery and a cover-up within CFP have also been aired,” he said.
The inquiry was set to deliver its final report today, but recent changes to the CBA submission have resulted in the delay of the report until no later than 26 June.
On 16 May 2014, the Senate committee was advised by the CBA and ASIC that there were “inconsistencies” in the way in which the compensation arrangements for Commonwealth FP clients were applied.
“This revelation suggested that, for some time, the CBA had not kept either the committee or ASIC fully informed about the compensation process for clients affected by serious misconduct within CBA’s businesses,” said Mr Bishop.
“The latest information that ASIC and the CBA provided to the committee in order to correct the record was sketchy and left many key questions unanswered,” he said.
“[The information] included the number of affected clients who did not receive correspondence from CFP and those who missed out on the offer of $5,000 to help them pay for an expert assessor to assist their claim,” said Mr Bishop.
“Concerned that it may still not have a correct understanding of what has happened, the committee has sought additional information and clarification from both ASIC and the bank on this matter of central importance to the committee’s inquiry and report.
“In light of these surprise developments, the committee is of the view that it requires more time to assess the significance the new evidence coming to light and the responses it expects to receive from ASIC and the CBA,” said Mr Bishop.
