CBA still paying banned planner
The country's biggest bank, Commonwealth Bank, has been paying banned financial planner Don Nguyen an income of tens of thousands of dollars a year since he was allowed to resign in 2009 amid an investigation that ultimately cost the bank tens of millions of dollars in compensation to his clients.
The bank's life insurance arm CommInsure has been paying Nguyen - one of the bank's star planners until he resigned - an estimated $70,000 a year, despite at least five of his clients still waiting to be paid by the bank in compensation for the financial losses suffered from inappropriate advice.
The revelation into Nguyen's ongoing payments comes as a Senate inquiry into the performance of corporate regulator ASIC is expected to turn its attention to the role of some former and current executives at CBA, including Nguyen. The Senate inquiry was triggered after an expose into the CBA financial planning scandal and ASIC's poor and delayed handling of it, despite a detailed tip-off from a group of bank insiders.
A number of CBA executives also knew what was going on inside CBA's planning business but tried to cover it up. These executives have never been punished. Some continue to work at CBA or are now working at a stockbroking outfit in Sydney, and other banks and wealth management operations around the country.
The news that Nguyen is still receiving income from the bank through an income protection policy came in response to a series of questions put on notice from senators Doug Cameron and John Williams to ASIC.
A former CBA employee said: "It wasn't a surprise he [Nguyen] was allowed to resign instead of being sacked. Management knew what he was up to and turned a blind eye because he was writing too much business for them."
Nor would it have been a surprise to the whistleblowers who had sent ASIC a four-page fax on October 30, 2008, warning them about Nguyen and the culture of aggressive selling at the bank's financial planning arm. "The message is clearly 'do what you have to do - or else'. The clients' interests don't really get a look-in," the fax said.
Nguyen was allowed to claim income protection from the same company, CommInsure, that he had earlier been investigated for defrauding. He was suspended for two weeks in September 2008 in relation to a $5000 advice fee payment from CommInsure to Nguyen for a client who was about to receive a $40,000 lump sum for a trauma claim.
An expose by myself and a colleague in June revealed that Nguyen was suspended in September 2008 and despite an internal investigation uncovering evidence of serious misconduct, including charging excessive fees and paying kickbacks to staff members for referrals, he was promoted in October 2008 to senior planner. Instead of being terminated and his clients compensated, they were told their depleted funds were caused by the global financial crisis. He was allowed to resign in 2009 rather than terminated, citing stress.
Nguyen was one of the bank's top 10 planners, writing $39 million of business in 2007, 3 times his target. He had 1300 clients and managed up to $300 million of their retirement savings. Part of the bank's culture at the time was to publish league tables showing off its top planners and embarrassing those at the bottom.
Nguyen is one of seven CBA planners banned from the industry for misconduct. He was banned for seven years in March 2011, more than two years after a group of CBA insiders known as the "ferrets" informed ASIC of his misconduct. According to ASIC, there are still five clients of Nguyen yet to be compensated.
In a series of answers to questions put on notice by senators Williams and Cameron, ASIC said it was not aware that Nguyen was being paid an income benefit during his Administrative Appeals Tribunal determination, where he was banned. ASIC said it became aware of this in August 2012.
In late May, Fairfax Media wrote to CBA asking if Nguyen was being paid income protection. A spokesman at the time said: "We cannot comment on the details of any of Mr Nguyen's personal insurance arrangements. He no longer receives any payments as an employee of the group."
Other questions put on notice include whether ASIC was given full access to relevant documents as part of its investigation into the scandal. It confirmed it had requested a series of reports prepared by CBA's internal fraud and investigation unit, Group Security, on March 24, 2010, but legal professional privilege was claimed.
An email written in June 2009 by a senior CBA manager and obtained by Fairfax Media suggests information about Nguyen was intentionally routed through CBA's legal department in an apparent attempt to use "legal privilege" over documents to block their disclosure in the event of litigation. Meanwhile, submissions continue to lob in for the forthcoming Senate inquiry.