ASIC updates Senate Inquiry on punished company

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ASIC lodged a fourth submission yesterday to the Senate Inquiry which has been tasked to investigate its performance.
 
The submission updates the Senate on Commonwealth Financial Planning’s improved business practices after complying with its enforceable undertaking with ASIC.
 
Poor financial advice practices – such as a sales-driven culture which caused advisers not to act in ther clients’ best interests – had led to systematic problems at Commonwealth. Earlier this year ASIC banned seven advisers, secured $50m in compensation and gave directions to change the troubled company’s culture.
 
But ASIC was criticised for not doing enough.

Commonwealth has now paid out around $51 million in compensation to more than 1100 clients who lost money after receiving poor financial advice, the submission says.
 
ASIC says Commonwealth has updated its risk management framework with changes including more monitoring of advisers and providing a minimum of 80 hours training to each adviser. The senior management team has been reshuffled and more managers appointed.
 
ASIC deputy chairman Peter Kell said the regulator is serious about making “real change” happen in the financial planning industry.

“Using an enforceable undertaking can substantially change behaviour and deliver solid compensation for affected customers.”

PriceWaterhouseCoopers was hired to report on changes the company made under the enforceable undertaking.

ASIC made an initial submission to the Senate Inquiry on 2 August, which gave an overview of its actions in relation to CFPL. Its second submission was made on 24 October, about the regulation of the Australian credit industry and the impact of various reforms. The third submission was made on 31 October, which addressed the inquiry’s terms.

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  • G1 on 18/12/2013 12:04:30 PM

    What a load of old bureaucratic C..p! Just look at what's being said here -
    "ASIC says Commonwealth has updated its risk management framework with changes including more monitoring of advisers and providing a minimum of 80 hours training to each adviser. The senior management team has been reshuffled and more managers appointed."
    More Managers to watch the bad guys (the Advisers who CBA employed and trained) - and is about to train for another 80 hours each! Wow!
    Seems the cover over the dung heap got a little tear in it and ASIC's fix - First, pretend it's not torn and maybe nobody will notice...if they do, and they tell someone in charge, shoot them...and if they don't die quickly, paste a bit more dung over the tear. That should fix it...pity about the smell though!
    It just won't go away. Better put some more managers on.

  • hesreto on 20/02/2014 12:40:36 AM

    we need a royal commission into the banking sector and asic immediately.

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