The Australian Securities and Investments Commission (ASIC) has been forced into the invidious position of having to correct statements it gave to the Senate Committee inquiry investigating its performance, in a process which has seen the regulator also reimposing action against planning businesses associated with the Commonwealth Bank.
ASIC announced late on Friday that it would impose, by agreement, licence conditions on the Australian financial services licences Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL).
According to the ASIC announcement, the conditions will require both businesses to undertake significant further work in relation to the compensation process for customers and will put in place independent monitoring of that work.
ASIC said it had taken the action as a consequence of the CBA informing it that the original process developed to compensate customers of two former CFPL advisers was not applied consistently across all impacted customers of the two businesses and that the inconsistency disadvantaged some customers.
Faced with having to correct statements his organisation made to the Senate Inquiry, ASIC chairman Greg Medcraft has sought to argue that the problem was not with the original compensation arrangements, but in the implementation.
"The compensation process originally developed was carefully designed to include a range of measures to protect the interests of customers involved," he said. "ASIC is extremely disappointed that not all of those measures were applied to all customers. We are now taking immediate action to remedy the inconsistent treatment."
According to ASIC more than 7,000 were reviewed with more than 1,100 customers receiving compensation. It said under the new arrangements, a further 4,000 customers would be given an opportunity to have the question of compensation reopened.
"I want to stress that we have not identified problems with the actual file reviews done in the compensation process nor with the amounts of compensation offered to customers. The problems in the process were with the communication," Medcraft said.
He said the corrective measures implemented by the Commonwealth Bank would be oversighted by an ASIC-appointed independent expert.
The ASIC Chairman said the regulator had also lodged a statement to correct the record with the current Senate Inquiry.
"Some of the information ASIC put to the Senate Inquiry about the compensation process was inaccurate because it was based on its understanding of information from CFPL, in particular CFPL's submission to the Senate Inquiry," he said.
