The country’s peak body representing financial planners has taken a stand on the Commonwealth Bank, saying it will support a royal commission into the bank unless the bank agrees to form an independent committee to oversee a “full and fair” compensation process to customers affected in the financial planning scandal.
In a letter to its members obtained by Fairfax Media, the Financial Planning Association’s chairman Matthew Rowe says: “Like many of you, I am appalled at the damage done to many customers of the Commonwealth Bank financial planning business as well as the actions of some in CBA management.”
The letter comes as the financial industry is reeling over the findings of a senate report into the CBA financial planning scandal and ASIC’s performance.
Mr Rowe said there are many CBA planners who have done a great job for their customers and he could “only begin to imagine what it must be like for them at this time".
He said FPA members accounted for over half of all financial planners in Australia. In the past five years, its members had received 7 per cent of ASIC sanctions, equivalent to nine FPA members.
“A telling statistic is [that] of these 9, we have had 4 members banned whom were engaged by the CBA group. So almost half of our members sanctioned in the last five years have been a part of the CBA.”
Mr Rowe said he had called on the bank to set up an independently chaired committee to oversee a compensation process for customers.
He said he was also calling on that committee to:
- Review the professional standards and ethics of CBA and Financial Wisdom Financial Planners
- Fund ethics training for all CBA and Financial Wisdom Financial Planners
- Support its financial planners having membership of an approved professional body. The CBA will reimburse the costs of these membership fees for its planners and will actively support engagement with the financial planning profession.
- Consult with the FPA on their ongoing continuing education program for CBA and Financial Wisdom Financial Planners
- Commit to forming a cornerstone partner in the proposed FPA Industry Compliance Program.
- Invite an FPA Board representative to join an independent review committee into client compensation.
FPA chief executive Mark Rantall laid down the gauntlet to the bank, saying: “Such a move is imperative if the profession stands a chance of restoring trust among consumers.
“In the past few weeks we have seen unprecedented events unfold before our eyes. We believe the clients impacted by untrustworthy advice need a voice. The FPA stands with those clients and is calling for a clear plan of action from the CBA to fully compensate all clients and ensure we don’t see a repeat of these appalling events in the future.”
The FPA said in a statement that there had been "a great deal of debate about the merits of holding a royal commission into CBA and role of ASIC.
"Today, as a bare minimum, the FPA is calling for a summit with a clear and independent charter around the changes needed to restore community trust in financial planning and ensure inappropriate advice outcomes rooted in complex product distribution and conflicted remuneration practices, are stamped out for good.”
“If we can’t have a Summit which commands the respect of the public, one with genuine teeth that can truly deliver positive changes, we would fully support calls for a Royal Commission. Our primary focus is the impacted clients of CBA and ensuring we never see something like this again. We need a system where when things go wrong, members of the profession act with speed and complete fairness,” Mr Rantall said.