Commonwealth Bank - Review of Dodgy Financial Scams

The Commonwealth Bank has launched a program to compensate customers who lost their money because of bad advice from the bank's employees.

A Senate report handed down last week found the bank responsible for customers losing hundreds of millions of dollars and called for a royal commission into the scandal.

In response, CBA has committed to offering a free assessment to customers who received advice from Commonwealth Financial Planning and Financial Wisdom between September 2003 and July 2012.

If that assessment finds the customer received poor advice, an "independent customer advocate" funded by CBA will make a compensation offer.

The bank says it will make available to customers the information it uses to conduct the review and asks customers to provide any information they have to the reviewers.

If customers feel that compensation offers are inadequate, the bank says they can appeal to an independent panel whose decision will bind CBA.

The bank says customers will not, however, be bound by the outcome of the review and can still take their claim to the Financial Ombudsman Service or pursue other legal remedies.

CBA says the process will be "overseen by an independent expert who will make their periodic reports public".

Chief executive Ian Narev says CBA's previous performance in financial planning was "unacceptable" and has unreservedly apologised to affected customers.

Deeds don't match words says Choice

The Senate committee looking into CBA's financial planning arm found the bank had, to date, not dealt appropriately with complaints over poor advice and alleged fraudulent practices by some of its planners.

Consumer group Choice has questioned the sincerity of the bank's apology, given the Commonwealth Bank was among other major financial institutions lobbying for a partial wind back of the previous federal government's Future of Financial Advice (FoFA) legislation.

"If the Commonwealth Bank was truly sorry, they would not have lobbied to remove essential consumer protections for financial advice," Choice chief executive Alan Kirkland said in a statement.

"Just a few weeks ago the Commonwealth Bank wrote to the Government calling for lower standards for financial advisers – this action does not match today's apology."

Choice says regulations introduced by the Coalition Government that came into force this week, and were supported by CBA, have watered down a requirement for financial planners to act in a client's best interests.

"Consumers must be able to feel confident that they are getting impartial financial advice they can trust, and advice should not be clouded by any type of financial incentive that reward them based on how much of a particular product they sell," Mr Kirkland said.