'Significant' conduct compo ahead for CBA
Compensation costs around misconduct and other controversies may mount at Commonwealth Bank, Ian Narev, the managing director, told the House of Representatives' Standing Committee on Economics in Canberra yesterday."Undoubtedly there will be more announcements on compensation owed to customers - some significant," Narev said.Anticipating these payments as bait for critics, Narev said further compensation deserved to be read as "a sign of progress".Compensation payments made by the bank over the last year or two, when conduct issues flared as a strategic priority for Commonwealth Bank, are negligible. Its Open Advice Review program (for poorly served financial planning customers) has racked up a compensation bill of less than A$10 million after two years labour. Related payments - connected to customers of three now sacked financial planners named during the hearing - are also slight. David Cohen, the chief risk officer, said these costs were less than $1.5 million, the bulk of which (around $1 million) had been paid to clients of Stuart Jamieson. For Sharnie Kent's "customers" the bank paid approximately $237,000. A third financial planner, Rebecca Locksley, was a very junior financial planner, who was grouped with the other two in yesterday's hearing by virtue of being banned by ASIC, but Cohen said she had not cost the bank anything in compensation to clients. (Cohen alluded to, but did not elaborate on the fact that Locksley was a relatively small cog in the CFPL machine, and was banned by ASIC for misleading and deceptive conduct while employed as a support planner to Jade Zaicew, who was banned from the industry for seven years by ASIC in April 2014. Cohen was not asked about, and did not include, fallout from Zaicew's actions in his analysis.) There may not be much more to emerge from this particular stream, as the Open Advice Review and payout costs may be wrapped up by late this year, Narev said.A second stream of conduct mitigation costs may yet be borne by the bank, Narev confirmed.Commonwealth Bank is very open to a discussion" on a bank victims' tribunal, Narev said, endorsing "a one stop shop, if efficient from a customer view."Costs to operate any victims tribunal, he said, "need to be borne in an appropriate way across the industry," a model similar to sector funding for the Financial Ombudsman Service.