Commonwealth Bank’s new compensation scheme falls short on the independence test
3 July 2014
The Commonwealth Bank’s new compensation scheme for victims of poor financial advice fails to ensure independence in the review process, according to law firm Maurice Blackburn, which has represented dozens of affected investors.
Responding to today’s announcement by the Commonwealth Bank, John Berrill, a principal at Maurice Blackburn, questioned how customers could be guaranteed an independent review of their advice given the bank appeared to be involved in every step of the process.
“The initial review is put back in the hands of the Commonwealth Bank. That was exactly the same process that failed customers last time around,” said Mr Berrill, who gave evidence to the Senate committee inquiry into ASIC’s handling of the matter.
“We also have questions about who appoints the independent customer advocate, the independent panel and the independent expert who will oversee the process. If it’s the Commonwealth Bank that appoints them, then that’s not independent.
“Customers – some who have lost a large part of their life savings – will fear they are not going to get a real and independent assessment of their grievances and their losses.
“The only way to have real independence is by making sure the entire process is taken out of the hands of the Commonwealth Bank.”
Mr Berrill said it was positive to see the bank acknowledge and apologise to customers who were not properly treated.
But he was concerned the bank’s new review process was too similar to the previous compensation scheme. “It smacks of a rejigging of the old failed arrangements,” he said.
Mr Berrill urged the bank to set out a timeline for the assessment and review process, saying victims had suffered for long enough, and needed some certainty around timing.
He also said the bank should make a public commitment not to hold customers to the six-year time limit restrictions involved in taking matters to court or to the Financial Ombudsman Service.