Coalition refuses royal commission probe into CBA
"Tens if not hundreds of thousands of victims are suffering and they have done so for decades, but this government refuses to act.": CBA whistleblower Jeff Morris. Photo: Rob Homer
The Coalition government has refused to hold a royal commission into the Commonwealth Bank of Australia as part of its response to a landmark Senate inquiry.
The inquiry, which spanned 12 months and attracted a record number of submissions, scrutinised the performance of the corporate regulator in the wake of revelations by a whistleblower of misconduct and fraud in CBA’s financial planning arm.
Thousands of people lost their life savings as a result of the allegedly bad advice given to them by planners at the country’s biggest bank.
The government will on Friday release its response to some of the inquiry’s 61 recommendations, many of which aimed to address failures within the Australian Securities and Investments Commission (ASIC) which took 16 months to act on warnings of the misconduct and cover-up within CBA.
However, it has pushed back decisions on a raft of recommendations relating to ASIC’s functions, powers and funding, until the Financial System Inquiry currently under way reports later this year.
The government has agreed to a key recommendation of the inquiry to set up a national registry of financial planners to track bad apples.
It will release details of the registry, which will require all advisers to list their name, status and work history, qualifications, membership of a professional body, any previous sanctions or banning, and details of the ownership of the licensee.
This will enable consumers to readily track planners and identify which institution they are aligned with – currently difficult despite the domination of the big four banks and AMP which own or are tied to 80 per cent of the financial planning industry.
CBA whistleblower Jeff Morris expressed disappointment at the government’s decision, saying it had called other royal commissions "at the drop of a hat into unions and pink batts for blatantly political purposes, yet had not accepted the thoroughly reasoned recommendations of a bi-partisan Senate committee".
He said the case for a royal commission was compelling and grew stronger every day.
"Since the Senate report, the problems at Macquarie Private Wealth have emerged, the ludicrously low standards of training have been exposed, one-third of insurance advice has been found to be defective, thousands of Timbercorp victims face losing their homes, and CBA has been dragging the chain on a questionable compensation scheme for victims," he said.
"Tens if not hundreds of thousands of victims are suffering and they have done so for decades, but this government refuses to act."
Since the Senate inquiry, CBA has set up a compensation scheme available to up to 400,000 customers who may have received shoddy advice.
The inquiry, sparked by a Fairfax Media investigation into widespread misconduct among CBA financial planners and managers, also called for a wider investigation into the financial planning arms of other industry participants, including Macquarie Group.
Since the recommendations were released on June 26, ASIC has agreed to set up an Office of the Whistleblower to improve the way it deals with whistleblowers.
The government is also considering a user-pays model to help fund ASIC, which is facing savage budget cuts of $120 million over four years.
This would involve groups such as liquidators and financial advisers contributing to the cost of monitoring and regulating their industries.
ASIC has previously estimated that the move would raise $287 million from these and other industries.
Auditors are estimated to cost the watchdog about $6 million to regulate but only pay $425,000 in fees; Australian Financial Services licensees cost ASICan estimated $108 million a year to regulate, but only pay $3.7 million in fees.