Commonwealth Bank Compensation Scheme for Victims of Financial Planning Scandal “a joke,” Senate investigation hears
A Senate investigation has heard “explosive” evidence from a whistleblower accusing the Commonwealth Bank of Australia (CBA) of continuing to deny justice to victims of its financial planning scandal.
Former Assessment Manager Russell Phillips described the bank’s compensation program as “a joke” and said he was “hit” and fired after complaining that clients were not being properly compensated.
- CBA’s compensation system for victims of financial scandals referred to as a “joke”
- The investigation said the system was in favor of rejecting the victim’s claims
- Fired employees after raising concerns about the program
“I firmly believe that the scheme is not fair, it lacks integrity and it is very opaque to outsiders who are listening to me today,” he told the Senate investigation into the financial advice.
“I got a call from a senior manager who resigned two weeks before I was leaving and she told me there was a hit list and there were so-called troublemakers on that hit list.
“[That was] People like me who spoke out in defense of clients that I felt [had been given] bad advice, but in line with our guidelines we had to evaluate [that advice] as appropriate. “
CBA clients lost hundreds of millions of dollars after financial planners invested their clients’ money in high-risk assets without their permission.
Schema advocates denying claims, the investigation said
Mr Phillips said he had 16 years of finance experience and was hired in April to assess claims under the CBA’s Open Advice Review program, which was set up after the bank apologized for the scandal last July .
The incentive structure at the bank made it cheaper to reject claims for damages.
Mr Phillips also said he was never allowed to meet these customers.
He told the investigation that on one case his manager told him not to pay compensation because the victim might be described as a “moderate” rather than a “conservative” investor.
“I was so affected by this judgment that I let it crash with the bank,” he said.
“I was quoted as saying that I think I said this program was a joke. I was fired for threatening behavior.”
Mr Phillips said on the day of his release that he had already written his resignation letter and cleared his locker – noting that about 10 of his colleagues had also left the CBA.
“What is frustrating is that they don’t listen to the staff. They have to get public before they start listening,” he said.
Claims show nothing has changed: Dastyari
Senator Sam Dastyari said he felt a sense of déjà vu following the initial investigation that uncovered the CBA’s financial scandal.
“Here we are, about 15 months later, and it feels like the same problems, culture, behavior, techniques are being re-used,” he said.
“Nothing seems to have changed in the program, the program to compensate these victims, either.
“These were explosive revelations today from a CBA whistleblower who made it clear that he believes that the structure and system put in place to compensate victims is not in the interests of the victims, but in the interests of the bank . “
Jeff Morris, the former CBA financial advisor who first exposed the financial scandal, said there should have been a royal commission on CBA’s mistakes.
“With CBA being fired from this royal commission, they have returned to their old tricks,” he told the investigation.
“It’s an opaque scheme and if there was a really independent look at that scheme it would open it up like a can opener.
“The big problem with this program is that these customer representatives were selected by the CBA, which they are part of a panel.
“When I talk to people, when I see the files, it’s not difficult to spot the problems.
“If there were really independent client attorneys in this process who spoke to clients with access to the documents they discovered and uncovered all of these issues with ease – the CBA doesn’t want that.”
19 out of 8,000 cases of damage are compensated
He said that out of around 8,000 claims, only 19 customers were compensated and received less than half a million dollars, or “about $ 25,000 per victim,” which is pretty funny considering some of the losses people are making have suffered.
Mr Morris said he met with Senator Mathias Cormann and warned him not to trust the bank.
“[I said] With this compensation system, the CBA turned ASIC (Australian Security and Investment Commission) into monkeys that had pulled the wool over their eyes, “he said.
“ASIC took them at their word, and if you trust CBA, they’ll do the same to you – and that’s exactly what happened.”
The Commonwealth Bank denied Mr Phillips’ and Mr Morris’s allegations.
“[We] stand by the independence and control of the Open Advice Review program, “said a spokesman.
“We welcome the review of the program and today we have invited all committee members to see how the program works and to meet the team and reviewers firsthand.”