What a banking mess! Corrupt regulators are the very reason we need a Royal Commission into Bankers, Financial Products and Services.  The Banks were the engineers of dodgy advice and products - investment products and low doc loans.  If you have a story to tell  This email address is being protected from spambots. You need JavaScript enabled to view it.

http://www.smh.com.au/business/cba-may-fall-victim-to-hubris-as-pressure-rises-over-financial-planning-scandal-20140704-3bdt8.html

CBA may fall victim to hubris as pressure rises over financial planning scandal

Business Date

July 5, 2014

Adele Ferguson

'What kills banks is hubris,'' says Brian Johnson, one of the country's most respected banking analysts.  They are five simple words but they strike at the heart of what can ultimately destroy a company - no matter what its size, its political clout or its storied history.  Johnson was referring to the various twists and turns in the Commonwealth Bank financial planning scandal that was exposed by Fairfax Media a year ago and culminated last week in a Senate inquiry calling for a royal commission.

It took the bank's chief executive Ian Narev seven days to come out of the bunker and address the explosive report from the Senate.  His appearance came after significant political pressure from Finance Minister Mathias Cormann, who is trying desperately to save his Future of Financial Advice (FoFA) amendments from a sudden death.  The CBA scandal has become emblematic of what is wrong in the financial planning industry, specifically the inherent conflicts of planners tied to or working for the banks.  To that that end the scandal has become a powerful weapon against Senator Cormann's financial advice regulations. It isn't surprising then that he wants CBA off the front page so he can spend next week lobbying Clive Palmer to back his regulations rather than join the opposition and Greens in disallowing them.

Narev responded to the Senate report and the negative media publicity with an apology and a compensation package that ''will not be material for investors''. Nor does it offer compensation for pain or suffering to customers for the years of suffering or a review of the management ranks.  Given the lack of ''materiality'', the announcement had no impact on the bank's share price. But it did prompt enormous discussion about Narev's attitude, the board's handling of the situation and the long-term damage to the brand.

Indeed, Johnson, who works for CLSA, released a report that said while it might be tempting to dismiss the issue as ''immaterial'', ''the reality is this response is driven by CBA's efforts to avoid a potentially expensive, disruptive and potentially a far more wide-reaching royal commission into the issue''.  It is yet to be seen whether Narev's and the board's response is enough to bury a royal commission or judicial inquiry.  What is known is his address on Thursday did not discuss allegations of forgery or fraud or a cover-up by managers. Nor did he explain why some of these managers and planners are still employed by the bank.  To ASIC the scandal happened in the past and until Thursday CBA believed it had handled the situation adequately. Whether this is hubris or arrogance rather than a culture of ''defensiveness'' is something to explore. But a letter sent to Narev by one of the bank's victims, Jan Braund, on January 9, 2013, five months before she took her story to Fairfax Media, suggests the bank might have averted some of the negative publicity if it had taken her letter seriously...................

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