ASIC slammed over CBA failure
Nationals senator John Williams slammed ASIC deputy chairman Peter Kell over a 16-month delay between the time whistleblowers first approached the corporate regulator and ASIC's belated move to seize the files of CBA financial planner Don Nguyen.
The hearing follows a Fairfax Media investigation that found the CBA had concealed improprieties by a top financial planner who once controlled about $300 million in retirement savings on behalf of at least 1300 clients.
The misconduct by Mr Nguyen, who has been banned by ASIC for seven years, allegedly includes forging client signatures, creating unauthorised investment accounts and overcharging. Some clients lost more than half their life savings, forcing them to seek assistance from Centrelink as they battled with CBA for compensation.
Senator Williams compared the case to that of insolvency practitioner Stuart Ariff, who was jailed for six years in 2011 on fraud charges. "To me this sounds like Stuart Ariff mark two," Senator Williams said. Whistleblowers contacted ASIC by fax about Mr Nguyen's activities on October 30, 2008, but ASIC did not investigate the allegations until the whistleblowers visited ASIC's offices in early 2010.
Fairfax Media found bank staff took part in a cover-up that allegedly included the falsification of documents after Mr Nguyen left the bank in an apparent bid to stall or limit compensation amounts.
"I believe in that fax it said there was some urgency in ASIC securing the files as they are being cleaned up. Why did it take ASIC 16 months to follow up on that fax, and numerous emails from the whistleblowers, to act in relation to the Commonwealth Financial Planning files?" Senator Williams asked.
Mr Kell declined to comment on the timing of ASIC's investigation but defended its handling of what he said was a "large and complex matter".
"It has been a landmark achievement that has completely changed the way the bank does business."
He said leadership of the bank's financial planning division "was changed wholesale" and $23 million had been recovered for 202 investors.
He refused to say whether ASIC would refer to police the allegations that signatures had been forged on some documents.
Senator Williams responded: "There are $1.3 trillion in superannuation funds in our nation, and this nation is going to rely on good, sound, clean advice for financial planning. You are the corporate watchdog, and I expect you, if you see wrongdoings and criminal acts, you report them."
aferguson@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Fairfax Media reported that Commonwealth Bank (CBA) concealed improprieties by a top financial planner who once managed about $300 million for at least 1,300 clients. Allegations include forging client signatures, creating unauthorised investment accounts and overcharging, with some clients losing more than half their life savings and needing Centrelink assistance.
Don Nguyen was a senior CBA financial planner named in the Fairfax Media investigation. According to the article, ASIC has banned him for seven years over the alleged misconduct, which includes forging signatures and creating unauthorised accounts.
ASIC was criticised for a reported 16-month delay between when whistleblowers first contacted the regulator (a fax on October 30, 2008) and when ASIC moved to seize the CBA financial planning files in early 2010. Nationals senator John Williams slammed ASIC deputy chairman Peter Kell over that delay during a Senate estimates hearing.
Whistleblowers contacted ASIC by fax on October 30, 2008, sent numerous follow-up emails, and eventually visited ASIC’s offices in early 2010. Senator Williams said the fax suggested urgency because files appeared to be being 'cleaned up.'
According to Peter Kell at the Senate hearing, leadership of the bank’s financial planning division was changed 'wholesale' and $23 million had been recovered for 202 investors as a result of the actions taken.
Yes. Fairfax Media found that bank staff allegedly took part in a cover-up that included falsification of documents after Don Nguyen left the bank, reportedly in an apparent attempt to stall or limit compensation.
At the Senate estimates hearing Peter Kell declined to say whether ASIC would refer the allegations of forged signatures and other possible criminal acts to police. Senator Williams said he expected the corporate watchdog to report wrongdoings and criminal acts.
Senator Williams highlighted that Australia has about $1.3 trillion in superannuation funds, so ensuring 'good, sound, clean advice' in financial planning is critical. The scandal shows how misconduct in advice and account handling can put retirees’ savings at risk and underscores the importance of regulatory oversight.
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