The Senate has tabled its final report into the performance of ASIC relating to a string of advice failures at CBA dealer group Commonwealth Financial Planning.
The report contains 61 recommendations, most notably including that a royal commission be held into the behaviour of financial planners at Commonweath Financial Planning as well as ASIC’s handling of the matter.
Tabling the report, Senate Economics References Committee chair Mark Bishop said ASIC “appears to miss consistent and clear signs of corporate wrongdoing, putting investors at risk”.
“To be blunt, the committee found ASIC wanting,” said Mr Bishop.
“[ASIC] allowed itself to be lulled into complacency, while corporate wrongdoers continued to abuse their clients’ trust,” he said.
Between 2006 and 2010, the management of CBA were “negligent” and “ignored wrongdoing”, said Mr Bishop.
“Both ASIC and CBA seem to put reports of fraud in the too-hard basket,” he said.
“There was inordinate delay in CBA recognising that advisers in Commonwealth FP were delivering bad advice,” said Mr Bishop.
ASIC was “too slow in recognising the serious problems at Commonwealth FP”, and “ASIC didn’t pay enough attention to whistleblowers”, he said.
CBA “deliberately played down the seriousness” of the behaviour of Commonwealth FP planners in an attempt to limit scrutiny from both the public and ASIC, said Mr Bishop.
More to come.
Westpac are pushing this thing called BT Super for life, where personal bankers (who do home loans) sell it without advice, super rollovers, etc.
They also have a phone based system where branch staff are getting customers on the phone to sell insurance on the spot, again without advice.
I’m a bank planner, but a good one, and this is a joke!
Don’t taint all bank models/planners with the CBA brush. I’m a highly experienced Senior Planner for NAB (Business Bank) and run a highly professional and successful business. I spent half my career IFA first before joining NAB and there are lots of advantages of being with a big bank. In NAB’s case, the business model is not broken. I’ve been flat dollar fee for advice for 7 years here, have a small client base, who are all highly engaged and serviced very well with at least annual reviews. I don’t just use managed funds or MLC funds either. Plenty of direct shares, property, SMSF’s, off platform investments, etc. I am able to give proper, professional, un-conflicted advice, which sometimes doesn’t even involve a product (i.e. strategy only) and am not incentivised otherwise. It all comes down to the quality of the individual adviser, not the model they work within, although I will admit the other banks do have models which encourage less client-centric behaviour.
Tack on an inquiry into the Industry Super Funds, whilst your about it. Their misleading advertising, pathetic ASIC response to continuous ISA ‘issues’ its time the ISA sacred cow was sacrificed as well.
Unfortunately a royal commission into Commonwealth FP will be restricted to only that. Any inquiry should look at the industry structure that encourages and assists this behaviour I.e. product sellers acting under the guise of “financial planner”.
I’ve said it in other posts and I’ll say it again – the only solution is to separate products from advice legally and structurally. Otherwise we are simply relying on the honesty of advisers. While 90% of advisers do the right thing, the other 10% can continue doing what they are doing as long as they are pretending to advise on behalf of product sellers.
Clearly, the existing checks and balances aren’t enough whether they are done by the product pushers themselves or by the chronically under-resourced regulator.
Its the business model of all the banks, not only the big 4, which is broken.
Get in there and fix the model whereby they financially reward planners for setting up aligned investment and insurance without taking into account the “best interest” duty, whether it will remain in this wording format or not!
“negligence”…”wrongdoing” and “bad advice” comes down to the individuals who are not supervised by the license holder and should be banned for such failures.
The business model which encourages this behavior and fails to monitor their advisors is one of the underlying issues.
Union funds and Banks need to be exposed for what they are doing – that is taking advantage of their respective clients’ naivety and trust in such institutions.
Yep & the banks will just cut cheque and continue sales 101 we
Nothing will change the banks are to large to control. the industry based funds are as well.
Just look after you clients & try to the right think and tried to ignore the BS
Remember the regulators will go for the small non aligned group as their pockets and not as deep. May be they should go the managers & advisers at CBA personally as well. In my view the only way to change the behavior of the big boys is make them personal liable, If it coming out of their own pocket i am sure it will change