Rogue former CFPL planner promoted so he would see “fewer clients”

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In an explosive appearance before the senate inquiry into ASIC’s performance yesterday, representatives of Commonwealth Bank of Australia (CBA) admitted that a planner facing allegations of fraud was subsequently promoted.

Commonwealth Bank wealth management group executive Annabel Spring told the inquiry that previous Commonwealth Financial Planning (CFPL) management actually promoted “rogue” financial planner Don Nguyen so that he would see fewer clients, reported the Sydney Morning Herald.

This was wrong, Spring acknowledged, before CBA general counsel David Cohen also admitted that the bank’s decision to allow Nguyen to return to work after the first investigation was a bad move.

This was just one of a series of mea culpas throughout the public hearing, which included appearances by former aggrieved clients of Nguyen, CFPL whistle-blowers, and accusations that subsequent ASIC investigations were a “staggering” failure.

The inquiry heard it took ASIC more than three years to act on the serious allegations facing “Dodgy Don” Nguyen, reported the Australian Financial Review.

He was eventually banned from offering financial services in 2011 after a group of whistle-blowers exposed his unethical conduct.

One of those was former CFPL planner Jeffrey Morris, who has slammed ASIC for its “slack regulatory regime”, and accuses the regulator of encouraging him to “walk away with what I had left”.

He said his submission to the senate inquiry was an attempt to “lay out the factual matrix to support these assertions, in particular to reveal the full extent of CFP[L]/CBA’s culpability in this matter and ASIC’s acquiescence in concealing same”.

Eventually an enforceable undertaking accepted by ASIC in October 2011 required CFPL to conduct a comprehensive internal review that uncovered "widespread misconduct".

At the time, ASIC banned seven financial advisers and secured $51 million of compensation for over 1,100 affected customers. On Monday, the regulator announced it had banned another former CFPL planner from practicing.

But Morris, along with a variety of other whistle-blowers, said the investigation process was a failure.

“The “Dodgy Don” affair didn’t come out of nowhere. Nor is it just a matter of ‘seven rogue planners’ as CFP[L] and ASIC would have it. There were far more than seven rogue planners but more importantly there was a system that nourished and protected them. How else did they survive? CFP[L] may have provided that environment but they did so under ASIC’s benevolent gaze,” he said in his submission.

Merilyn Swan, the daughter of an aggrieved former client of Nguyen, also appeared in front of the senate inquiry to criticise ASIC.

Despite ascertaining in 2008 through its extensive surveillance of CFPL that “the quality of advice and standards of practice in CFP[L] were unacceptable”, the regulator still elected not to make this public nor warn investors, she said in her submission.

“ASIC's incompetence has left rogue financial planners banned for very limited periods, free to ply their trade in the near future. ASIC abandoned and failed to protect the whistle-blowers who have sacrificed their careers, health, family and financial security to expose CFP[L],” Swan said. “CBA and CFP[L]'s senior management have not been called to account and continue to publically deny any knowledge of the activities within CFP[L] despite clear evidence to the contrary.”
ASIC chairman Greg Medcraft told the senate inquiry that the regulator had learnt its lesson from the event and has changed the way it deals with such situations, reported the Australian Financial Review.
It has welcomed recommendations by senators that all future reports given to it under enforceable undertakings be made public.
And in other dealings, ASIC has already “sought to be much more transparent and that will continue”, Medcraft said.
CBA top lawyer Cohen was also reprimanded in front of the inquiry for downplaying the systematic fraud within CFPL.
He was chastised for constantly blaming the failure on “inappropriate advice”, reported the Sydney Morning Herald.
However he vowed it would never happen again and admitted that “we should have moved more quickly”.


Another rogue Commonwealth Financial Planning adviser banned
ASIC's public hearing underway
ASIC updates Senate Inquiry on punished company                

  • Baffled on 6/05/2014 4:06:12 PM

    I agree. ASIC has to be smart in formulating effective policies to prevent the like of greedy cfp management from promoting a culture of sucking blood out of innocent clients who place their trust in the big banks. ASIC cannot hide away from their responsibility on the pretext that they are short of manpower or resources; for god's sake we have heard enough of that crap earlier. Another significant thing currently lacking in the advice industry is the level of qualifications of advisors. It clearly needs to be brought up as it directly effects the quality of advice? And when I say Financial Advise it should cover mortgages and personal debt also. Financial advice is a serious business where the person giving advise has the power to make or break people's lives so how can a school dropout (pardon me if I am wrong) can sit in an office and sell mortgages, personal loans or credit cards to unwary clients without having adequate qualifications or training? In my opinion any financial advice to sell a financial product should be covered under a uniform advice process where the person recommending or selling a financial product goes through a seven step advice process that financial advisers have to currently go through. After all the person selling a product should have enough RBA just like a doctor should have sufficient basis for their recommendation of treatment after going through a patient's situation. It's not a rocket science to curb the current greedy and irresponsible behaviour of the banks but there is clearly a lack of will both on the part of the banks to fix things up (as it hits the bottom of their balance sheets) and the ASIC as corporate watch dog? I think that ASIC will just let this time to pass by catching a few small fish in an attempt to gain back the trust of Australian people, but come on ASIC focus your short staffed energy to change the culture of big 4 banks who control about 80% of the market for financial products. If you can catch the big fish I think the job is done!

  • Alistair on 11/04/2014 11:04:54 AM

    ASIC the Corporate Cop sleeping at the wheel. Are we surprised. Incompetence by ASIC and yet these minions are trying to have a say in the FP world while government and product manufacturers with their sales force are and have been derelict.
    This is easy to fix. Remove the conflict between adviser and the product manufacturer for ALL investment related products and have a flat commission upfront and ongoing for all insurance risk products.
    As to the banks, life offices, and industry funds doing their best to compromising advice to the consumer, the folks in charge at the top should be held accountable for their inept behaviour and face jail for condoning such behaviour. My god to promote a thief for being a thief and encouraging theft. Best interest duty is served.....for whom...the banks, that life office or industry fund ?
    I guess its to hell with the adviser as they are the scapegoat and to hell with the consumer....they are just fools to be taken for a ride by those who merely placed their trust in these sales folk from CBA and other institutions not FP professionals.

  • mark longhurst on 11/04/2014 10:17:28 AM

    banks rule this place and don't give a fig about enforceable undertakings, if this had been an independent FP group they would have been banned from operating, the banks just head back to the board room and pop corks after asic rulings and sadly they are 80 %of the industry..

  • Innocent Observer on 11/04/2014 10:10:12 AM

    Adviser B, I don't agree that the level of misconduct isn't a reflection of ASIC; Instead I believe it is (in all cases) a reflection of greedy, unethical and/or lazy "advice".

    We need ASIC to have real teeth to kick down the doors of these crooks and have them strung up. Sure, at the core they are a bureaucracy, but they are also understaffed.

    I believe a starting point is mandatory (and tough) penalties for anyone who knowingly allows this kind of crooked conduct to go on without reporting. A crook will always be a crook, but if we can get the good guys to wake up to the fact that they are the ones who allow (many of) these events to occur, then maybe we can stamp out the minority scum that tarnish our profession.

  • Adviser B on 11/04/2014 9:47:51 AM

    In light of ASIC's failings, 'can't be bothered investigating corruption' attitude, ignoring complaints and evidence of misconduct and happily letting it continue, refusing to do their job etc, their recent denouncement of the industry being full of bad apples is quite hypocritical.

    Bad apples flourish because ASIC, who's job it is to police and prevent them, don't do their job at all. So the level of misconduct in the industry is a reflection of ASIC.

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