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It took the threat of a royal commission and intense pressure from Finance Minister Mathias Cormann to get the Commonwealth Bank boss Ian Narev to ''unreservedly'' apologise to the thousands of customers who fell victim to dodgy financial advice inside the bank's financial planning division.
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'Phenomenal' damage to Commonwealth Bank
Commonwealth Bank in "damage control", says Fairfax senior business columnist Adele Ferguson after the bank outlines its planned compensation for financial planning victims.
Narev blamed a culture of ''defensiveness'' for the apology taking more than a year after Fairfax Media exposed the scandal inside the bank and almost six years since bank whistleblower Jeff Morris informed the corporate regulator.
On Thursday he outlined a plan to reopen its compensation offer to any customer who feels they might have fallen victim to unscrupulous advice between 2003 and 2012.
The process will kick off in August but the devil will be in the detail. How many customers might be affected or the estimated cost per claim is anyone's guess. Narev declined to share the bank's estimated assessment on the basis he didn't believe it would be material.
Narev described the compensation package as ''wide-ranging'' and ''unprecedented''.
Everyone will be hoping the package lives up to this promise but for now it is light on details.
The bank is yet to announce who will be appointed to the specialist CBA team reviewing past advice, who will be the ''independent'' consumer advocate, which will be funded by the bank, or who will sit on its ''independent'' panel, which will be set up to determine whether compensation is payable and if so how much.
Merilyn Swan, whose parents fell victim to dodgy planner Don Nguyen, questioned the process.
''It seems the chickens are simply being invited back into the henhouse for dinner with the fox,'' she said. ''Once again the proposal from CBA is one totally controlled by the CBA.''
When victims are reviewed other facts need to be taken into account other than just the risk profile of the customer. For instance, who says the risk profile that CBA uses is appropriate?
It raises the question why the corporate regulator didn't take oversight of the process and appoint an independent adviser as it has demanded as part of new licence conditions it imposed on the bank last month after discovering the bank hadn't offered the same process of compensation to all clients of dodgy advisers.
In May, ASIC chairman Greg Medcraft said the regulator had been too trusting of the bank and imposed new conditions on its two financial planning licences, a most serious move. The conditions are still to be finalised.
The bank has set up a website for victims to make contact and will put ads in the papers inviting customers to come forward if they want to be assessed.
Given the amount of trust that has been lost by the bank and the damage done to the reputation of the financial planning industry, a more appropriate route would have been to complement the ad blitz with a mail out to customers or a phone call.
It is a point not lost on Opposition Leader Bill Shorten, who said the process put the onus on customers to go to the bank, rather than the bank going to them.
Whatever the case, the bank would do well to make sure it doesn't muck this up.
It has lost a lot of trust from customers and any more scandals or revelations that it isn't taking things seriously will do irreparable damage.
The bank - and the Coalition - will be hoping that the announcement on Thursday is enough to take a royal commission off the table.
The expectation was that some heads would roll given the bank gave the wrong information to the Senate and the regulator about its compensation scheme and the amount of money it had paid out. There was also an expectation it would put a figure on how much it would provision for customers.
The keen interest of the government has been heightened by the need to push on with amendments to the Future of Financial Advice (FoFA) law, which it introduced as regulations last week.
Senator Cormann is now facing a situation where his regulations may be disallowed in the new Senate once it sits on July 7.
It is no surprise he is behind the scenes pushing the CBA to get the scandal and the explosive findings of a Senate inquiry off the front pages.
But the elephant in the room remains the question of vertical integration and whether banks should be allowed to own financial planners given the inherent conflict of interest in manufacturing products and then having an army of planners flogging them.
This is something the original FoFA never addressed and something that needs to be looked at, otherwise these sorts of scandals will continue to happen.