May 6, 2014
The Commonwealth Bank has once again come under fire for the actions of its financial advisers, with the ABC airing a story featuring a client whose adviser recommended he replace his existing insurance policy with one issued by CommInsure.
The ABC’s Four Corners program ran an investigation into the conduct of the bank and its financial planning arm, Commonwealth Financial Planning (CFP). The Four Corners program, which aired earlier this week, featured three cases in which clients described being severely disadvantaged by the actions of CFP advisers. Among the clients profiled was Teghan Couper, the plaintiff in what has become known in the industry as the ‘churn case’.
In the case of CFP v Couper, a client who switched his life insurance cover from Westpac to CommInsure on the advice of his CFP adviser was left uninsured when CommInsure voided the contract due to non-disclosure issues. The court concluded that CFP’s authorised representative was negligent and engaged in misleading or deceptive conduct, in that he was too hasty and failed to sufficiently impress upon Mr Stevens (the client) the risk he took replacing one policy for another. The decision was subsequently upheld by the NSW Court of Appeal, and the estate of Mr Stevens was awarded damages in the amount of the original insurance benefit the client was entitled to. For more on this case, click here to view a detailed analysis in our new Case Study Library.
In a statement issued to Four Corners about the case, a CBA spokesperson said:
“We respect the decision of the Court of Appeal, and wish to express our sympathy for the tragic circumstances of the customer and their family.
“We acknowledge that the most appropriate action in this case would have been for the customer to have remained with their existing policy. If the Commonwealth Bank had been aware of all relevant circumstances, there would have been no reason for the customer to terminate his existing policy.”
CBA also went on to apologise to customers impacted by what it termed ‘CFP adviser issues’, including clients of ex-financial adviser Don Ngyuen, whose conduct formed the basis of the recent Senate Committee inquiry into the actions of the Australian Securities and Investments Commission.
“We have significantly transformed our business as a result of these events. We have changed the management team and structure, the culture, the processes and the systems. The substantial investment we have made has resulted in major improvements in the business and demonstrates our determination to ensure that these regrettable events are never repeated,” the CBA spokesperson said.