Royal Commission welcome: compensation regime must start now for victims of poor financial advice from Commonwealth Financial Planning Ltd
27 June 2014
An independent and transparent compensation regime is needed for victims of negligent financial advice from Commonwealth Bank financial planners, according to law firm Maurice Blackburn which has acted for dozens of affected investors.
Responding to the damning findings contained in the Senate Economic References Committee report into ASIC’s handling of Commonwealth Financial Planning Ltd (CFPL), John Berrill, principal at Maurice Blackburn, said:
“The Senate inquiry exposed the ugly side of commission-driven financial planning advice given by advisers who were lining their own pockets rather than acting in the best interests of their clients.
“The compensation regime agreed between ASIC and CFPL was flawed. As a result, many victims were not fully compensated, if at all. A Royal Commission could take a long time to conclude, but the question of compensation needs to be addressed immediately.
“There must be independent oversight and consumers must be given independent advice so that this time round, clients of the bank will recover what they have lost, which for many of them, is a big part of their life savings.”
Mr Berrill said while a Royal Commission was welcome, it would inevitably take many months or years before a report was handed down. In the meantime, retirees would have to survive without the nest eggs they spent their lives building up.
“ASIC has indicated that it plans to impose new licence conditions on CFPL including setting up a new compensation review process. This can’t come too soon. Victims have suffered enough for too long.
“The report underlines the importance of protecting consumers from rogue financial advisers. The government needs to completely rethink any Future of Financial Advice (FOFA) amendments that undermine consumer protections such as the removal of the best interest test and allowing for conflicted remuneration for general advice.
The industry needs an unequivocal standard that financial advisors must act in the best interests of their clients and to make them accountable when they don't.”