ASIC’s damning assessment of CFP’s former culture
Conflicts of interest, arising from commission-based payments, were at the heart of the problems with Commonwealth Financial Planning (CFP), according to the Australian Securities and Investments Commission (ASIC).
Further, ASIC deputy chairman Peter Kell has told the Parliamentary Joint Committee which will be reviewing ASIC's performance with respect to CFP and other financial services organisations, that implementation of the Future of Financial Advice (FOFA) changes will go some way towards addressing those issues.
He said the media had been right to shine a light on the conduct five years ago of CFP "because it reminds the public how far we have come in changing financial planning".
"There was unacceptable and unlawful conduct at CFP. Clients were given inappropriate advice and many suffered badly because of it.
"And that is exactly why ASIC took serious enforcement action. Our actions:
* had seven advisers banned;
* set up a compensation system that will result in 1127 customers receiving around $50 million. There are around 37 cases yet to be resolved; and
* forced CFP into an enforceable undertaking that required the group to change completely the way it does business."
Kell said CFP had been a complex matter and "cases like this involve much background work before a public result is achieved. That is how law enforcement works. ASIC has to also carefully assess information presented to us and make judgments about what would stand up in court".
"On the topic of whistleblowers, we cannot and will not discuss whistleblower involvement in any particular case," he said. "If ASIC revealed these details it would compromise the integrity of our whistleblower policy and deter people coming forward," Kell said.
"What person would approach ASIC if they suspected we might discuss their case with a newspaper reporter? In fact, we go out of our way to protect whistleblowers and several years ago successfully fought a case in the Federal Court to conceal someone's identity."
AUTHOR
Mike Taylor
Recommended for you
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
