Inappropriate financial advice – CBA and Macquarie

Slater and Gordon is investigating compensation claims on behalf of investors who received financial advice from Commonwealth Financial Planning, Financial Wisdom and Macquarie Private Wealth following reports of serious deficiencies and misconduct in respect of the financial advisory arms of the Commonwealth Bank of Australia (CBA) and Macquarie Bank.

On 26 June 2014 a Senate Committee delivered its Report on the investigation and handling of the rogue advisors and systemic misconduct at CBA’s financial planning businesses Commonwealth Financial Planning (CFP) and Financial Wisdom (FW) which was conducted by the Australian Securities and Investments Commission (ASIC).

Under an Enforceable Undertakings regime imposed by ASIC, some victims of poor financial advice have received compensation from CFP. Under the compensation schemes established to date, investors who suffered losses due to CFP and FW’s conduct have received approximately $51m in compensation payments. However, as many as 4,000 investors may not have had the same access to redress as others. Some may have entered into inadequate arrangements and it appears that many victims have not been properly informed of their rights to participate in these compensation schemes, including the offer of financial assistance to fund independent advice in relation to offers received.

The Senate Committee recommended that a Royal Commission, judicial inquiry or some other form of compensation scheme be set up in relation to such matters. In response to that recommendation, the CBA announced its Open Advice Review Program on 3 July 2014.

The Review Program is open to customers who received advice from CFP and FW between 1 September 2003 and 1 July 2012 and who hold concerns about the advice received.

On behalf of its clients, Slater and Gordon has agreed to assist CBA in the development of the Open Advice Review Program, including the processes and methods by which participants’ claims will be reviewed to ensure the program will be transparent, rigorous and result in fair and equitable outcomes for affected CBA customers.

Macquarie Client Review Program

In January 2013, Macquarie and ASIC agreed to an Enforceable Undertaking. The Enforceable Undertaking followed an extensive ASIC investigation into Macquarie’s financial product advice business which revealed a series of serious deficiencies including:

• client files not containing statements of advice;
• advisers failing to demonstrate a reasonable basis for advice provided to the client; and
• poor client records and lack of detail contained in advice documents.

On 13 August 2014, Macquarie wrote to around 160,000 its past and current customers advising of a process by which a review of their file can be conducted (the Client Review Process). If you have received this letter, you are eligible to have your file reviewed. Importantly, the process allows you to be reimbursed up to $5,000 for professional advice (including legal advice) to consider the outcome of Macquarie’s review of your file.

How Slater and Gordon can help

Slater and Gordon’s professional negligence lawyers have many years of experience in helping Australians who have suffered losses from poor financial advice, including being involved in a number of compensation schemes and class actions.

Slater and Gordon is providing assistance to CBA and Macquarie customers who wish to have their file reviewed by those banks, and will offer independent legal advice on this process, initially, on a no cost and no obligation basis.

You can contact us by calling 1800 555 777.