Dodgy financial planner practices exposed

A TV program, aired Monday, examines the alleged fraudulent actions by financial planners and a delayed regulatory investigation in the 2008 CBA scandal.

Another TV investigation has brought to light the dodgy practices of financial advisors around the world, keeping the industry on its toes.

The TV network ABC aired an episode of its Four Corners program Monday night coined ‘Banking Bad,’ examining the sales-driven culture behind financial planning.

The program highlighted the practices of rogue financial advisors within the Commonwealth Bank planning arm, following a special investigation by Fairfax Media and ABC.

The investigation centred on Don Nguyen – once considered a ‘star’ financial planner – who was banned from providing financial advice until 2018, alongside seven other Commonwealth Bank of Australia (CBA) planners.

Nguyen – whose banning sparked an inquiry by the Senate into the slow speed at which the Australian Securities and Investments Commission (ASIC) handled the investigation into the 2008 scandal – told the network he was set up, claiming he was never interrogated by the bank for his actions, and that the advice he gave to clients was "within the Commonwealth Bank guidelines.”

No one ever said “Don, this is too much, don't do this,” he said.

Working in what has been described as “a flawed compliance structure and aggressive sales culture,” Nguyen, allegedly veered hundreds of clients towards inappropriate products, forged signatures, overcharged on fees and created unauthorized accounts for clients without their permission.

Nguyen argues that his clients were “financially educated” and understood exactly what they were signing. "Sorry, how can these people all come up to you and say 'Oh, I don't know what I've signed,’” he told the TV network. (continued)

#pb#

In 2009, smack dab in the middle of an investigation that cost the bank more than $20 million in client compensation, Mr. Nguyen resigned from his position citing illness. He is currently claiming $70,000 annually in a personal income protection policy, which he acquired with the Commonwealth Bank’s CommInsure division. 

The Four Corners program also revealed that in a Commonwealth Bank document dated 2006, the bank labelled Nguyen’s as a “critical risk” – two years before a bank insider Jeff Morris exposed the misconduct to the Australian Securities and Investments Commission (ASIC). The bank refused to comment on whether a breach report was sent to ASIC at this time the report was created.

Finally, the program looked into a separate case where the CBA denied a dying man Noel Stevens payout on his life insurance policy, forcing him to flight for the claim, highlighting the conflicts of interest when tellers and planners earn commission on product sales.
 
Back in February, CBC Marketplace conducted its own special investigation into the culture of financial advice delivered by Canada’s big banks, revealing that some advisors are giving consumers inaccurate, misleading and inappropriate advice. Caught on camera, those advisors with below-standard performance delivered questionable guidance including unrealistic promises for returns and inadequate risk assessments.

Industry Reaction to ABC's Four Corners "Banking Bad":

On the defense, the Financial Planning Association’s (FPA) chief executive Mark Rantall told Australia’s Financial Standard: “Our members who are doing the right thing are clearly disappointed when we have negative reporting of one financial planner in the media.”

The CBA also released a statement: “We acknowledge we should have identified the problems earlier, and we should have acted more quickly once issues were found.
We have significantly transformed our business as a result of these events,” the bank said.

The ASCI’s deputy chairman Peter Kell admitted that the regulator should have acted faster, been more transparent and communicated better with whistleblowers.

Related Articles:

Are you 'stuck between a rock and a hard place?'

Regulate the industry salesperson, says advisor

Product pushers aren't planners, says industry veteran
 

LATEST NEWS