ASIC has lodged a fourth submission today with the Senate Inquiry into its performance. The submission details changes to Commonwealth Financial Planning Limited’s (CFPL) business practices as result of compliance with its enforceable undertaking (EU) with ASIC. The submission also provides an update on CFPL’s compensation scheme and the methodology used to compensate clients.
PriceWaterhouseCoopers (PwC) was engaged to report on changes CFPL made under the EU.
The EU has resulted in change in management and reshaped CFPL’s risk management framework with changes including the redesign of key performance indicators (KPIs) and remuneration to drive appropriate adviser behaviour along with other measures to change the business culture. There is also greater monitoring of advisers through both a new technology-based risk management system, and an increase to the number of managers to 25 meaning that one manager is responsible for 12 to 15 advisers rather than 25, as was previously the case, and provision of a minimum 80 hours training to each adviser, with a focus on risk management, supervision and monitoring.
The submission also explains the details of the compensation scheme ASIC negotiated with CFPL, which has resulted in CFPL paying out approximately $51 million in compensation to more than 1100 affected clients.
“ASIC is serious about effecting real change in the financial planning industry and, as this submission shows, using an enforceable undertaking can substantially change behaviour and deliver solid compensation for affected customers”, ASIC Deputy Chairman Peter Kell said.
