CBA admits lax attitude with ASIC on advice woes

CBA has acknowledged its poor engagement with the corporate regulator around misconduct within its advice business over many years.

At yesterday’s Hayne royal commission hearings, CBA chief executive Matt Comyn was asked by senior counsel assisting Rowena Orr of instances where the bank had poor engagement with ASIC around instances of misconduct.

Mr Comyn responded by saying it had occurred across the advice business for many years.

“Are you referring there to inappropriate advice or to the fees-for-no-service issues?” Ms Orr said.

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“Both,” Mr Comyn said.

Ms Orr then asked in what ways CBA’s engagement with ASIC was poor in relation to matters around its advice business.

“We were narrow and legalistic, defensive, and arrogant in our dealings with regulators, and often we left it to our lawyers and compliance people in the organisation to deal with our regulators,” Mr Comyn said.

“I think it should have been much greater business ownership with a much greater level of transparency in the way that we're dealing with our regulators, we tended to inform them as someone from ASIC said to me recently, on a very narrow bound of what the actual issue was.”

Ms Orr continued by noting that frequently CBA didn’t notify ASIC of anything at all.

“Do you accept that?” she asked Mr Comyn.

“Yes, I think there have been instances where we have failed to notify ASIC,” Mr Comyn responded.

“Do you accept that CBA should have notified ASIC that it had been charging customers fees for financial advice services that had not been provided much earlier than it did?”

“Yes.”

Ms Orr then asked Mr Comyn why that didn’t happen.

“We had formed a view around those – I think it was the 297 clients or customers – where it was clearly evident that that was a limited analysis. That should have been at that point in time the source of a notification,” Mr Comyn said.

“But as I’ve learnt, I think the issues as it relates to fees-for-no-service commence well before that.”

In October, ifa reported on findings from the Hayne commission interim report that it found in a number of cases where ASIC acted against major banks in the form of infringement notices.

In those notices, the regulator included the following disclaimer in its media release: “The payment of an infringement notice is not an admission of guilt in respect of the alleged contravention.”

Hayne noted in the report that the major banks have been treated in ways that “would allow them to think that they, not ASIC, not the Parliament, not the courts, will decide when and how the law will be obeyed or the consequences of breach remedied“.

“Attitudes of this kind have not been discouraged by ASIC’s approach to the implementation of new provisions of financial services laws,” the report said.

“Too often, ASIC has permitted entities confronted with new provisions, of which ample notice has been given (such as the unfair contract terms provisions), to take even longer to implement the provisions than the legislation provided.”

CBA admits lax attitude with ASIC on advice woes
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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