Crikey



CommBank prepares desperate campaign to restore credibility

In a desperate bid to salvage its reputation in wealth management and take the pressure off the government over its gutting of the Future of Financial Advice consumer protections, the Commonwealth Bank is planning a major national campaign to address the outcome of the ASIC inquiry.

The inquiry examined the activities of financial planners working for the bank’s Commonwealth Financial Planning arm, whose malfeasance, including forging signatures, cost clients tens of millions of dollars, and the feeble response of the Australian Securities and Investments Commission. The inquiry was misled by the Commonwealth Bank and ASIC about the compensation scheme currently in place, and recommended a judicial inquiry to identify all victims of the bank, and address allegations of file doctoring by the bank.

The debacle is deeply embarrassing to the government, which has set out to remove consumer protections from the FOFA financial planning reform package established by Labor in 2012. The only support for the government’s gutting of FOFA has come from the big banks and financial planners. Last week, Fairfax reported that Finance Minister Mathias Cormann, who has tried to implement the gutting of FOFA via regulation, met with CEO Ian Narev to discuss handling the crisis. The Commonwealth has compounded the problem by trying to downplay the scandal, and Narev has avoided playing any role in addressing it.

That is set to change: Crikey understands the Commonwealth is today shooting a video message from Narev finally addressing the scandal. The bank will also roll out full-page ads in Friday’s newspapers. The bank, insiders say, will also run a national campaign targeting people affected by CFP planners’ misbehaviour urging them to contact the bank for remediation.

Critically, that will also include people harmed by CFP who have previously settled with the bank. The remediation process will be overseen by an independent panel, with advice made available for victims.

Anything less than a grovelling apology from Narev and an independent, generous restitution process risks, as Americans say, looking a day late and a dollar short — not merely for the bank’s reputation in financial planning circles (given the bank’s misleading of the committee, and ASIC’s gross ineptitude, who would currently trust a planner linked to the Commonwealth?) but for the government’s efforts to gut FOFA. They look likely to die in the Senate as soon as Cormann tables the regulations when the new Senate meets next week, with the Palmer United Party, the Greens and Labor all committed to disallowing them.

Moreover, as the industry has examined in detail the Cormann regulations, experts on all sides have begun spotting major loopholes. More on that soon.

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Categories: Companies, Federal, Guardian, Markets

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10 Responses

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  1. Who would be going anywhere near a financial planner from any organisation. I certainly will be keeping every cent I have well away.

    by Yclept on Jul 2, 2014 at 2:18 pm

  2. So how much will it cost, and who’ll really be funding this advertising blitz, forced on them by their institutionalised self-regulated greed?

    by klewso on Jul 2, 2014 at 3:02 pm

  3. Sad day when there are so few in the corporate sector that can be regarded as trustworthy. From financial institutions to supermarket chains, if they can put one over the customer for a quick buck it is game on. Trust should flow from the top, clearly,and without ambiguity; obviously this government is blind to such fanciful notions.

    by katas on Jul 2, 2014 at 3:19 pm

  4. For anybody who missed the Commonwealth Bank scandal this expensive blitz will draw it to their attention.

    Labor’s FOFA legislation was a winner - trust Abbott & Co to unravel it. Yet another appalling decision to add to their growing list.

    by zut alors on Jul 2, 2014 at 3:25 pm

  5. It is said a trade union official paid his bus fare with trade union money to attend a financial planning meeting at the commonwealth bank, will that suffice to bring about a royal commission into the CBA Mr Cormann?

    by Bill Hilliger on Jul 2, 2014 at 3:31 pm

  6. Very depressing. I used to think the CBA was reputable. Now it is cutting services and trying to direct the elderly into changing their accounts when they come in to withdraw money. Who would trust them.?

    by Barbara Bradshaw on Jul 2, 2014 at 4:07 pm

  7. Profits B4 Punters”

    by klewso on Jul 2, 2014 at 5:35 pm

  8. I decided to transfer as much of my business as possible from the Commonwealth Bank to the Bendigo Bank because of the CAB’s refusal to divest from activities supporting the fossil-fuel industry. I’ve now been prompted by this financial planning scandal to actually do it. Yes!

    by Liz Connor on Jul 2, 2014 at 7:13 pm

  9. Comm Bank gets everything it deserves for this debacle.

    They need to institute robust external examination of everyone who dealt with their ‘planners’ (cough), and repay them in full.

    But the real problem here is cultural. They knew about it at the time and did nothing, and they fought valiantly to avoid compensating until it was looked at by every regulator, but still it took the senate inquiry to really fess up.

    Directors should have been across this, and should have acted, and now should be sacked if they are shown to have done nothing.

    Reputation is everything, and they now have a reputation.

    It’s great to know that the taxpayer will be paying 30% of every advertising dollar they use to restore their credibility. Now we all lose.

    Thanks CBA.

    by Dogs breakfast on Jul 3, 2014 at 12:12 pm

  10. I would suggest a wider perspective is required. We now know that $200 million (52 paid plus an estimated 150 for future) gets you: legislation to water down financial planning legislation and a government stone-walling a royal commission. Why the latter? CBA is thin end of wedge and no other bank wants others turning spotlight on them. The pressure on Narven from other banks and Fed Govt would have been intense. As an aside I note that it used to cost a brown paper bag of money to get an act in pre-Fitzgerald Qld. There obviously has been a significant inflationary spiral.

    by luke godwin on Jul 4, 2014 at 5:28 am

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