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.