Commonwealth Bank financial advice victims critical of review scheme
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Version 0 of 1. Lawyers acting for victims of Commonwealth bank financial advisors have continued to criticise the review scheme announced by the bank which promised to examine the investments of all clients who request it. Bowing to pressure from financial and consumer advocates and a brutal Senate inquiry report on the scandal, CEO of the Commonwealth Bank, Ian Narev, on Thursday apologised “unreservedly” to clients and revealed details of the independent review, but maintained it was the fault of “poor advice” by “some people” working for two businesses – Commonwealth Financial Planning and Financial Wisdom. Critics said the review scheme is far from independent, and provide little real compensation to wronged clients. Senior commercial litigation lawyer with Slater & Gordon, Ben Hardwick, said while the scheme is a step in the right direction, the devil will be in the detail. “We would like to know who will appoint the independent panel, independent expert and the independent customer advocate. Will ASIC have input into these appointments? Will victims’ lawyers have input into these appointments? “We would also like to know if full documentation will be made available.” “There are still questions that need to be answered, but it is good to see that the scheme has several important safeguards in place for participants,” he said, including reservation of the right for clients dissatisfied with the process to go to the ombudsman or take further legal action on their own. Guardian Australia understands retired judges and QCs are likely to be requested to appear on the independent panel, and consumer law firms to work as advocates and advisors for the clients. Immediately following the announcement of the review there were strong criticisms of the compensation element’s lack of consideration for consequential losses. Commonwealth Bank has already paid $51m to more than 1,100 clients through a 2010 remediation scheme. Many of those clients signed confidentiality agreements upon receiving settlement, Guardian Australia has been told, but they are still eligible to access the new review process. The Senate inquiry labelled the actions of the “rogue” advisors fraudulent and unethical, and said there was forgery and concealment of facts in their dealings with clients. It also alleged a management conspiracy within Commonwealth Financial Planning Limited that saw one advisor promoted. The inquiry recommended a royal commission to investigate the Commonwealth Bank, although one member, Liberal Senator Mark Bushby, was a lone dissenting voice, and one that was quickly noted by the federal government. “He did make a very persuasive argument that yet another inquiry might not be the best way forward," the finance minister, Mathias Cormann, said. Cormann is continuing to push for controversial reform of financial regulations that offer protection to clients. He has been accused of attempting to water down protections and bring back a “sales culture” of commission based incentives. The Commonwealth Bank review program is expected to be up and running by mid August. |