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Senate Inquiry into ASIC

Photo: James Alcock (http://www.smh.com.au/business/cba-chief-ian-narev-on-notice-over-compensation)

Photo: James Alcock (http://www.smh.com.au/business/cba-chief-ian-narev-on-notice-over-compensation)

On 3 July 2014, Ian Narev, the Chief Executive Officer for Commonwealth Bank, addressed a press conference to respond to the Senate Inquiry’s report on CBA financial planning scandal.  The scathing report was issued on 26 June 2014 after months of investigation and relentless coverage so the fact that it took a week for CBA to respond is, in itself, telling.

Click here to access the Senate report. And for a high level review of the more interesting aspectsread “Wading in the shallows: Advice, ASIC and Accountability”.

Mr Narev provided a superficial and perhaps unconvincing response to the report and at the heart of the CBA’s considered response was his proposal to commence a CBA-run review of all financial advice provided by CFP and Financial Wisdom over a 10-year period.

The public and media response to this proposal has been other than what Mr Narev might have anticipated. Industry insiders and affected clients remain skeptical of CBAs ability to properly review their own advice.

And for good reason.

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enate Inquiry into ASIC

Update, 26 June 2014:  Today the Senate’s Economic References Committee released its report on the performance of ASIC and referred to two of my suggestions when making their recommendations.

An effective financial services regulator means you get better advice.

Over the last few months, two Fairfax journalists, Adele Ferguson and Chris Vedalago, exposed some of the inherent problems within the bank-owned financial planning groups.  Their expose uncovered some terrible advice given by CBA and brought into question the ability of ASIC to regulate the industry effectively. Their efforts not only won them a well deserved Walkley Award nomination, but resulted in a Senate Inquiry into the Australian Securities and Investments Commission.

Submissions are welcome from the public or anyone in the industry who wants to have their say.  Sadly, despite criticism from around the industry for ASIC’s handling of such issues, there have been no submissions from the banks, industry associations or lobby groups.  And hardly a practical or constructive submission from any individual working in financial services who might have some insight into why ASIC has failed to deal with issues such as those at CBA.

If people don’t speak up publicly and provide thoughts on how ASIC might become more effective, nothing will change and you remain in danger of getting bad advice.

With that in mind, this week I made the following submission to the Inquiry.

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