REP 431 Comparison report: Commonwealth Financial Planning Limited and Financial Wisdom Limited
Released 23 April 2015.
Report prepared by KordaMentha Forensic.
The Commonwealth Bank of Australia Group (CBA) includes two financial planning entities known as Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL) (Licensee or Licensees). Both Licensees are required to be licensed by ASIC.
In September 2008, CFPL commenced investigations into potentially inappropriate advice given by one of its financial planners Mr Don Nguyen. CFPL undertook activities referred to as ‘Project Hartnett’ to assess and compensate clients who suffered losses as a result of inappropriate advice from Mr Nguyen.
On 12 July 2010, CFPL lodged a Significant Breach Notification with ASIC in relation to the conduct of ex-CFPL adviser Mr Anthony Awkar. On 17 December 2010, CFPL informed ASIC that the remediation of Mr Awkar’s clients would be included in the scope of Project Hartnett. As a result, the remediation activities under Project Hartnett related to two advisers – Mr Nguyen and Mr Awkar.
On 25 October 2011, ASIC accepted an enforceable undertaking (EU) from CFPL which included the review of the advice given to clients by an additional 16 CFPL advisers who were the subject of Significant Breach Notifications submitted by CFPL to ASIC in the period 1 July 2008 to 25 October 2011.
Pursuant to the EU, CFPL undertook to review and, if appropriate, compensate clients who were adversely impacted as a result of inappropriate advice being provided to them by these 16 advisers subject to Significant Breach Notifications. The processes under the EU are referred to as the Past Business Review.
Although not covered by the Past Business Review: a.Three additional CFPL advisers; andb.A further six FWL adviserswere identified by the Licensees and were subsequently included in the Licensees’ compensation activities.
CBA staff and executives were involved in the Licensees’ compensation activities.
From around 20 April 2012, the compensation activities relating to the 16 advisers in the Past Business Review, the additional three CFPL and the six FWL advisers were given the name ‘Project Baringa’.
This Comparison Report compares and identifies the differences in the process steps undertaken by the Licensees for communicating with Affected Clients and providing for their participation in both the review process and the decision making process applied between Project Hartnett and the Compensation Program. It identifies any process steps applied in Project Hartnett that were not applied in the Compensation Program.