CBA apologises, flags review

CBA apologises, flags review

The Commonwealth Bank of Australia has apologised to all customers who lost savings as a result of fraud in its financial planning arm and agreed to open all files from a nine-year period for review.

Chief executive Ian Narev said the conduct of some advisers had been "unacceptable".

"We know this is unacceptable and I unreservedly apologise to all customers affected," he said in a statement.

"At the centre of the matters which a recent Senate committee reviewed is the very disturbing fact that some people working for our Commonweatlh Financial Planning and Financial Wisdom businesses breached that trust (with customers),” he said.

"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 told reporters that despite internal investigations, there may be other cases as yet undiscovered.

"It's possible we're going to learn abut new instances," he said.

"If they come up we'll address them in the same spirit of openness."

Mr Narev sought to pre-empt concerns about why the bank was only announcing the review now.

The events had surfaced during the global financial crisis, which was "obviously a complex time" from an investment perspective, he said.

When the bank launched a remediation program in 2010, it did so believing it was the right thing to do, he said.

"Because we felt we were doing the right thing, over time an air of defensiveness came down over this.

"Over the past few weeks we have replaced that attitude of defensiveness with a spirit of openness.

"We've learnt that even if we believe we've acted fairly, people can feel powerless in their discussions with a big company, and that underlines our approach."

The Australian Securities and Investments Commission earlier responded to the Senate report, admitting it should have acted in a more timely manner, saying its trust in the bank was misplaced.

Mr Narev said the bank was setting up an open advice review program for any customer who received advice between September 1, 2003, and July 1, 2012, and has concerns about that advice, in an attempt to prevent a repeat of the scandal.

The program will allow any customer who received bad advice from the financial planners at the heart of the scandal to have their cases reviewed.

It will also oversee an in-house review by the bank into the advice its financial planners gave to customers during that period.

Following the bank review, any customer who still has concerns could get a further review by an independent panel, which would also assess whether compensation was payable.

Cormann welcomes review

Finance minister Mathias Cormann welcomed CBA's announcement of a review, saying he hoped it would bring about the "satisfactory resolution of any outstanding and unresolved legitimate issues for aggrieved CBA customers as efficiently and as effectively as possible".

Meanwhile, opposition leader Bill Shorten said the lender's response fell short, but was coy on whether Labor would support a royal commission into the bank. 

Mr Shorten told media in Melbourne it was first up to the government to respond to the CBA scandal, and then urged the bank should contact all individuals who were offered poor financial advice, rather than relying on them to come forward.

The committee investigated unethical dealings by CFP advisers between 2006 and 2010 as part of a year-long investigation into the performance of the Australian Securities and Investments Commission (ASIC).

The investigation included an examination of ASIC's slow response to whistleblowers inside the bank who alerted the regulator to some advisers' misleading and deceptive conduct.

Mr Narev said the committee had looked at events during the global financial crisis, a time when even well-advised people were losing money on investments.

He described as "complicated" the bank's process of compensating customers who received bad advice.

But, he said, the aim had been to "put customers back in the position they would have been had they received suitable advice".

CBA has made changes: Narev

Mr Narev said the bank had transformed its financial planning businesses by making changes to management, systems and culture to ensure they provided quality advice.

Commonwealth Bank has so far paid out $52 million in compensation to the more than 1,100 affected customers.

Mr Narev's comments follow a damning Senate report that called for a royal commission to investigate the bank's financial advisers over claims of fraud and misconduct by some CBA financial planners.

The report recommended a royal commission be established into the wrongdoing, which occurred between 2006 and 2010 and included the forging of client signatures to facilitate profit-producing product switches.

The committee's chairman, retiring Labor senator Mark Bishop, said CBA failed to open its books and fully identify the number of clients affected and those entitled to compensation.

He said the bank's focus was on downplaying the extent of wrongdoing and minimising the amount of compensation it had to pay.

However, the bank has refuted those accusations and says it worked openly with both the committee and the ASIC.

Prime Minister Tony Abbott earlier said the government would "carefully consider" the report.