Both the Commonwealth Bank and ASIC were quick to jump the gun and issue statements defending their positions ahead of the airing of ABC’s Four Corners program last night.
The Four Corner’s investigation, Banking Bad
, gave the victims caught up in the Commonwealth Financial Planning (CFPL) scandal a voice.
The monumental CFPL case has since resulted in the banning of eight financial advisers and a pay-out of $51 million to over 1,100 affected customers.
The Four Corners investigation particularly focused on the commission culture within the banking industry and how that directly contributed to the CBA saga.
“The program comes at a time when Australia's biggest banks are trying to expand a system that rewards bank tellers and financial planners for selling their products to customers,” the program blurb says.
The family of Noel Stevens were a few of the many victims that featured.
They told the sad story of a man dying of pancreatic cancer taking on the big bank in a David and Goliath-type battle in the last six months of his life.
Previous to his dealings with CBA, Stevens had a watertight life insurance policy with Westpac Bank.
However he was cold-called and encouraged by a teller at CBA to come in and have a chat with one of their planners.
In the meeting, he was convinced to change his life insurance policy over to CBA.
The adviser and the teller got the commission, leaving Stevens to the wolves.
Tragically, just a short time after the policy swap, Stevens was given the terminal cancer diagnosis. He tried to claim on his new life insurance policy but was rebuffed – CBA found that he’d answered several questions about his health incorrectly.
Stevens spent the last months of his life fighting the bank for his life policy money, and it was only a few days before his death - when he was in an inconcious state - that he prevailed.
Prior to the airing of Banking Bad
, the CBA released a statement that directly addressed Steven’s plight.
“We acknowledge that the most appropriate action in this case would have been for the customer to have remained with their existing policy. If the Commonwealth Bank had been aware of all relevant circumstances, there would have been no reason for the customer to terminate his existing policy,” it said.
The statement went on to more generally address the scandal, and said the bank has significantly transformed the business in terms of the management team and structure, the culture, the processes and the systems; as a result of these events.
“We deeply regret the events that occurred in our financial planning business where the behaviour of a number of advisers was unacceptable,” it said. “We have apologised to our customers for these events and we have worked with customers to put things right. Customers who experienced losses as a result have been remediated. We continue to work with the small number of customers whose cases remain unresolved.”
And ASIC, who has been heavily criticised due to its treatment of the whistle-blowers that exposed the shocking behaviour within the CFPL, and the 16-months it took them to launch an investigation, also pre-empted the airing of the program by releasing a video statement on YouTube.
Chairman Peter Kell speaks directly-to-camera and blasts CFPL for the “simply unacceptable” behaviour six years ago.
“Commonwealth Financial planners were giving very poor advice to clients, driven by conflicted commission payments. This was part of a wider problem of unacceptable standards and conflicts of interest right across the financial planning industry that ASIC had publicly identified,” he said. “And ASIC understands the severity of this situation and that is exactly why we took enforcement action. We banned eight advisers from the industry. We secured $52 million compensation to more than 1100 clients.”
Kell concedes that ASIC should have acted faster, been more transparent, and communicated better with whistle-blowers, but said the watchdog has since improved its processes in these areas, especially around whistle-blowers.
“More broadly, ASIC has been working to raise standards in the financial advice industry,” he said.