Commonwealth Bank agrees to payouts over poor financial planning advice

Commonwealth Bank’s bad week continues, with the Australian Securities and Investment Commission announcing that the bank has agreed to compensate clients who received financial advice from a planner who ASIC says breached the Corporations Act.

Commonwealth Financial Planning, a fully owned subsidiary of Commonwealth Bank Australia, became the subject of an ASIC investigation after the watchdog said that a planner employed by CFP until July 2009 had “potentially breached various sections of the Corporations Act by providing inappropriate financial advice to a large number of clients”.

“CFP is reviewing relevant client files to identify individuals who have been adversely affected,” ASIC said in a statement.

“In cases where inappropriate advice was given by the former CFP representative, CFP will calculate the investment positions those clients would have held had they received the appropriate advice and compensate accordingly.”

The compensation program, which will be monitored by ASIC and an independent expert, may also include interim payments to clients who have suffered hardship as a result of the advice.

ASIC and CBA have not named the clients.

Law firm Maurice Blackburn is acting for a group of former CFP clients in NSW who claim to have suffered losses due to poor advice.

These claims are at various stages in the NSW Supreme Court.

ASIC says it is continuing its investigation into the former planner and will continue to review the company’s “compliance, supervision and monitoring arrangements” for planning representatives.

Commonwealth Bank was slammed earlier this week for boosting its mortgage rates by 45 basis points, well above the 25-basis-point increase to official interest rates handed down by the RBA on Tuesday.