Bill's Media Releases

BANK SCANDAL SHOWS NEED FOR STRONG CONSUMER PROTECTIONS

The Opposition will establish a fresh Senate Inquiry into how thousands of Commonwealth Bank customers lost their savings and whether the Abbott Government’s weakening of consumer protections will place investors at greater risk.

What occurred at the Commonwealth Bank is a scandal of shocking proportions – and it should never be allowed to occur again.

No one knows how many people have lost their savings, nor how much was lost.

It beggars belief that the Abbott Government is watering down consumer protections in financial advice, particularly in light of what has occurred at the Commonwealth Bank.

The new inquiry will be asked to consider:

• The actions of the Commonwealth Bank of Australia (CBA) including those of the executive during the misconduct;
• Why financial advisors who were known to be behaving unethically were promoted;
• The performance of Australian Securities and Investments Commission in its initial investigation and whether stronger laws are required; and
• The implications of financial advice reforms on the financial services sector, including moves to reduce consumer protections in light of the CBA misconduct.
This isn’t just about the Commonwealth Bank, this is about the investments and savings of millions of Australians.

The Opposition is extremely concerned that despite all these events, the Abbott Government is weakening – rather than tightening - consumer protections.

The Abbott Government has been too slow to respond to this scandal and the Opposition is concerned it will simply sweep it under the carpet because it finds the issue politically inconvenient.

While the Commonwealth Bank’s announcement last week of compensation for victims is a good first step, it falls well short of what’s needed. The onus shouldn’t be on customers to come forward – the Bank should be working its hardest to identify customers.

More importantly, this should never be allowed to occur again.

The inquiry will be asked to provide an interim report by 1 September. Full draft terms of reference are below.

DRAFT TERMS OF REFERENCE:
That the following matters be referred to the Senate Economics References Committee for inquiry and an interim report by 1 September 2014, with the final reporting date to be agreed by the Committee:
(1) The actions of the Commonwealth Bank of Australia (CBA) in relation to the misconduct of advisers and planners within the CBA's financial planning businesses including, but not limited to:

a) a thorough examination of the actions of the CBA executive in uncovering and responding to episodes of misconduct, including allegations of a cover up;
b) the circumstances surrounding decisions to promote financial advisors who were known to be behaving unethically, including decisions as to their ongoing employment;
c) examination of the initial evidence provided to the inquiry into the performance of the Australian Securities and Investments Commission by the Senate Economics References Committee regarding compensation provide to CBA clients, and the revision of that evidence;
d) identification of any conduct that may amount to a breach of any law or professional standard; and
e) identification of any clients affected or likely to be affected by the misconduct and assess the appropriateness of the compensation processes provided by the CBA to these clients.

(2) Consider mechanisms, including a centralised register, that would ensure financial planners found to have breached any law or professional standards in their employment at one firm are transparent to the sector and consumers;

(3) Consider the implications of financial advice reforms on the financial services sector, including moves to reduce consumer protections in light of the CBA misconduct;

(4) Consider any recommendations the Committee views necessary, and further to the recommendations contained in the report of the inquiry into the performance of the Australian Securities and Investments Commission by the Senate Economics References Committee, regarding regulatory or legislative reforms that may be required.

(5) Consider other similar episodes of financial advice, planning or services that may amount to a breach of any law or professional standards;

(6) Seek the views of people affected by financial services misconduct regarding responses from financial services providers, government regulations, industry standards and other matters relevant; and

(7) Any related matters that the Committee regards as relevant.

WEDNESDAY, 9 JULY 2014

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