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CBA announces new compensation scheme for financial planning victims

Date

Adele Ferguson and Ben Butler

Anyone who signed up with a Commonwealth Bank financial planner between 2003 and 2012 will be able to apply for compensation, with claims are to be assessed by a "specialist Commonwealth Bank team".

Anyone who signed up with a Commonwealth Bank financial planner between 2003 and 2012 will be able to apply for compensation, with claims are to be assessed by a "specialist Commonwealth Bank team".

Commonwealth Bank chief executive Ian Narev has bowed to community, industry and government pressure over the financial planning scandal by announcing a new compensation scheme for victims this morning.

‘‘Some people failed in their primary obligation – to act in the best interests of our customers’’. 

CBA chief Ian Narev

Anyone who signed up with a Commonwealth Bank financial planner between 2003 and 2012 will be able to apply for compensation, with claims are to be assessed by a ‘‘specialist Commonwealth Bank team’’.

CBA chief Ian Narev says some staff members‘‘failed in their primary obligation – to act in the best interests of our customers’’.

CBA chief Ian Narev says some staff members‘‘failed in their primary obligation – to act in the best interests of our customers’’. Photo: Louise Kennerley

The move could involve hundreds of thousands of clients but in a statement signed by Mr Narev this morning the bank did not put a dollar figure on the cost.

Mr Narev also did not announce any reshuffle in executive ranks connected to the financial planning scandal.

Commonwealth Financial Planning (CFP), the bank’s biggest planning division and the scene of some of the worst behaviour by planners, has 300,000 clients.

The bank has already paid out $52 million to victims at CFP.

Mr Narev said ‘‘some people’’ at CFP and another another CBA financial planning division, Financial Wisdom ‘‘failed in their primary obligation – to act in the best interests of our customers’’.

‘‘We know this is unacceptable and I unreservedly apologise to all customers affected.

‘‘Poor advice provided by some of our advisers between 2003 to 2012 caused financial loss and distress and I am truly sorry for that.’’

Mr Narev has been under intense pressure to respond to a scathing senate inquiry report released last week that called for a royal commission into fraud, forgery and a management cover-up in the financial planning division of the bank.

He said the CFP and Financial Wisdom had been ‘‘transformed’’.

‘‘There have been changes in management, structure and culture. 

‘‘We have also invested in new systems, implemented new processes, enhanced adviser supervision and improved training.

‘‘However, I acknowledge there are views among some customers, and indeed in the Senate report released last week, that our approach has not been sufficient for all our customers. We have listened carefully and this program is a direct response to those concerns.’’

The senate inquiry was triggered by a Fairfax Media investigation last year into the bank’s financial planning division.

Thousands of clients were affected by misconduct by planners at CFP and Financial Wisdom.

Federal Treasurer Joe Hockey's mother-in-law Patricia Babbage was among the victims of rogue Commonwealth Bank financial planners, suffering heavy losses after taking the advice of now-banned planner Chris Baker.

More to come

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