The Australian Securities and Investment Commission (ASIC) has put Commonwealth Financial Planning (CFPL) on notice that its Australian financial services licence could be cancelled if it fails to comply with new conditions imposed by the regulator.
Asked what the consequences of non-compliance with the conditions could be, ASIC said: “Generally, AFS licence holders that do not comply with the conditions of their AFS licence could face suspension or cancellation of their AFS licence.”
The conditions on the AFS licenses of CFPL and Financial Wisdom follow on from ASIC’s action, after it deemed as insufficient the Commonwealth Bank’s initial process to compensate customers who received bad financial advice. According to ASIC, “affected customers must be contacted by the relevant AFS licensee with an assessment of the advice they received and an offer of a further review”.
Click here for the full list of conditions.
Another point of note is the provision that customers must also be “offered up to $5000 to assist with obtaining their own financial or legal advice to assess the original review of their advice and any compensation offer”.
Professional Planner believes this is the first official statement to publicly acknowledge the bank’s first review process was in many cases flawed.
This statement also differs on another important point, outlining that only former CFPL customers who have already had a review are eligible for the $5000 to assist in obtaining independent legal or financial advice.
An earlier CBA advertisement seems to imply all former customers could potentially qualify for the cash grant. As reported here last week, the head of Shine Lawyers class action against CBA-owned licensee Financial Wisdom, Sasha Ivantsoff, questions this. “Their interpretation of it is probably different to the way we see it,” he said.
Compliance expert yet to be appointed
The ASIC announcement also indicates it is due to appoint an “external compliance expert to oversee the AFS licensee’s compliance with the conditions”. The regulator says it is currently finalising the appointment of this expert, so was unable to identify who this would be.
Law firm Clayton Utz is understood to be spearheading CBA’s legal efforts and Shine Lawyers is representing former Financial Wisdom customers in a class action against the bank.
David Adiseshan, managing director and new owner of former Financial Wisdom practice Meridien Wealth, who is helping former clients’ seek restitution, suggests law firms could also play a role in CBA’s yet-to-be-announced independent review panel.
He suggests law firms Maurice Blackburn, Slater & Gordon and Shine Lawyers as potential parties on the panel.
“It wouldn’t surprise me to see that one or more of those firms are included on the [CBA] Open Advice Review panel,” Adiseshan says.
