The corporate regulator has ordered the board members of Commonwealth Bank to take personal responsibility for cleaning up the mess left by the financial planning scandal.
Under new licence conditions imposed on two controversial CBA advice divisions, Commonwealth Financial Planning (CFPL) and Financial Wisdom, the issue of compensation for victims must be on the agenda when the board meets early next week before the bank's full-year results announcement on Wednesday.
Following a review of compliance standards by an independent expert, the directors of CFPL and Financial Wisdom will also be required sign a letter to the Australian Securities and Investments Commission saying they are satisfied that are obeying the new licence conditions.
The CBA board is headed by chairman David Turner, who said in May that he no longer lost sleep over the financial planning debacle.
Other members include former NBN Co chairman Harrison Young, now chairman of the risk committee and author of erotic novel Partners; former chief executive of failed surfwear company Billabong, Launa Inman; Jane Hemstritch, who is also a director of Lend Lease, Santos and Tabcorp; and former AMP CEO Andrew Mohl.
ASIC said it would impose new licence conditions in May, after it emerged the bank had provided it with misleading information about its compensation process for victims.
ASIC chairman Greg Medcraft told a Senate hearing the regulator had put too much "trust and confidence" in CBA.
"I think that when we deal with others we probably are going to be a hell of a lot more sceptical going forward," he had told a Senate estimates hearing in early June.
The new licence conditions came into effect on Friday, almost three months after they were first announced.
They include provisions opening up compensation for clients who received shoddy advice from a group of rogue planners at CFPL and Financial Wisdom.
This new compensation process will run parallel to the bank's own "Open Advice Review Program", unveiled by CEO Ian Narev last month after a scathing Senate inquiry report found evidence of fraud, forgery and a management cover-up within the financial planning division.
A compliance expert, appointed by ASIC but paid for by the bank, will review the reasonableness of the bank's previous attempts at compensating victims and tell CBA what additional steps it should take to identify rogue planners who have not yet been exposed.
Clients unhappy with the bank's compensation offer may take their dispute to the Financial Ombudsman Service, even if it is outside the usual time limit and is for more than the $150,000 cap on awards.
CBA is also required to give ASIC monthly updates on the number of new victims and rogue planners it has identified.
It could lose its licence if it fails to comply with the new conditions.