Banking Bad: the whistleblower's story
A senate inquiry is scheduled to report its findings later this month after a whistleblower, Jeff Morris, alerted authorities to misconduct by Commonwealth Bank financial planners. A special investigation by Fairfax Media and the ABC's Four Corners programPT3M49S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-37rga 620 349 May 5, 2014
The man at the centre of the Commonwealth Bank financial planning scandal that sparked a senate inquiry has lashed out at the bank, claiming it never properly trained him or supervised his activities.
Don Nguyen, one of eight CBA financial planners banned by the Australian Securities and Investments Commission from providing financial advice until 2018, claims nobody at the bank ever said to him: “Don, this is too much, don’t do this.”
Mr Nguyen allegedly forged signatures, overcharged fees and created unauthorised investment accounts for his customers without their permission. The bank paid hundreds of his clients more than $20 million in compensation.
Banned until 2018: Former Commonwealth financial planner Don Nguyen. Photo: Supplied
In Banking Bad, a special investigation by Fairfax Media and the ABC’s Four Corners program airing on Monday night, Mr Nguyen speaks for the first time, saying nobody at the bank, not even its compliance department, ever said “what you are doing is wrong”.
He said most of his customers were “financially educated” and knew what they were signing. “Sorry, how can these people all come up to you and say, oh, I don’t know what I’ve signed, I don’t understand,” he said.
Mr Nguyen was allowed to resign from the bank in July 2009, citing illness amid an investigation that ultimately cost the bank more than $20 million in compensation to hundreds of his clients.
He is claiming $70,000 a year on a personal income protection policy he took out with the Commonwealth Bank’s CommInsure division.
Four Corners and Fairfax Media located him at his family’s dry-cleaning business south of Sydney. Later, in a phone call, he refused to say if he was working in the business. Under the terms of his policy, he is allowed to work in a limited capacity.
The special investigation also uncovered evidence that the Commonwealth Bank suspected Mr Nguyen’s actions might have led to “criminal liability” or attracted a “custodial penalty” if he got caught.
A document, dated September 2006, two years before bank insider Jeff Morris blew the whistle on his misconduct to the corporate regulator ASIC, labels Mr Nguyen a “critical risk”.
The bank refused to comment on whether it sent a breach report to ASIC at the time. Under its licence, the bank is obliged to send a breach report within 10 days.
The senate inquiry is scheduled to report its findings later this month. A key recommendation is speculated to be a review of the bank’s compensation scheme. CBA paid out $50 million in compensation to 1200 clients of seven of its financial planners, a scheme that had been described by many as flawed.
Mr Morris said the bank should be forced to re-open the compensation scheme. “I suspect a broader review is going to uncover there are a lot more, like tens of thousands of clients, who are probably entitled to compensation. It has never been looked at.”
Banking Bad will also examine a case where CBA denied a dying man, Noel Stevens, a payout on his life insurance policy. In the final months of his life, Mr Stevens was forced to fight for what was rightfully his. The case highlights the inherent conflicts of interest in bank tellers and financial planners earning a commission for selling bank products.
The bank released a statement ahead of the program going to air saying: “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.”
The bank says it has cleaned up its act since the scandal of 2008, including hiring new management and improving its compliance structure.
* Banking Bad airs on Monday night at 8.30pm on ABC Four Corners.