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Concern over small uptake of bank comp scheme

February 24th, 2015

Choice has expressed concern over the small number of people registered for the Commonwealth Bank-run compensation scheme for victims of the bank’s past poor financial advice.

Only 4,610 people had allegedly registered with the new scheme as of January 2015, despite it being open to almost 400,000 past and present clients, Choice Financial Services Advisor, Erin Turner has advised.

Turner said the 1% response may suggest shortcomings in the bank’s communication of the scheme to past and present clients. Turner said the bank’s running of a pilot program to test the principles of its compensation scheme, while sound, “may be creating confusion” among victims of poor past advice.

“Victims could feel roadblocked and frustrated; we look forward to the bank finalising its pilot scheme and entering into direct talks with its victims,” she said.

Turner said it was “unfortunate” the Federal Government had not moved on recommendations for a Royal Commission into the financial system, but said there was “some hope” in the form of the a Senate committee inquiry, Scrutiny of Financial Advice, which finalised submissions in December last year and is due to report to parliament later this year. Both Choice and the bank have lodged submissions to the inquiry.

In response, a bank spokesperson said its position on the financial advice matter was covered in its December 2014 Promontory Financial Group report. However, on November 2, 2014, the bank announced it had appointed three plaintiff lawyers – Maurice Blackburn, Shine Lawyers and Slater and Gordon – as independent customer advocates for customers with grievances (at no cost to customers); along with an independent review panel headed by retired High Court Justice Ian Callinan; and an independent promontory financial group.

In a statement, Chief Executive Officer of the Commonwealth Bank Ian Narev said the appointments were designed to ensure customers had access to independent support through the open advice review program and independent advocacy on their behalf. In November, 2014, the bank has also announced an extension of the customer contact element of the program.

Details regarding the program will be included in the next statement or notice to be sent to the more than 300,000 current Commonwealth Financial Planning customers. The bank said the details would include clear guidance about how customers of Commonwealth Financial Planning between 2003 and 2012 can register for the program.