CFS letter gaffe controversy catches 1000 clients
Thecontroversy surrounding the Commonwealth Bank’s (CBA) contacting of clients held by rival dealer groups has ballooned, with the group admitting last week that it wrote to 1000 clients of 39 different advisers outside the group, requesting they seek advice from a CBA planner regarding their investments.
As revealed byMoney Managementlast week, investors who received the letters were invested in theColonialMaster Fund through their adviser’s dealer group but were contacted by theCommonwealth Financial Solutions(CFS) dealer group about switching investments when the master fund withdrew a number ofBTfunds from its investment menu.
CBA executive general manager for financial planning and advice services Geoff Austin says the clients were contacted in error and the group would not deny that it had made an administrative bungle in contacting clients outside its own dealer group.
“Once we made the decision to put the BT funds on hold we wrote to the customers, and in doing so contacted the 1000 clients who are with the advisers outside the CBA network,” Austin says.
However, he says the error was a result of the advisers’ previously holding a proper authority with the Commonwealth.
Matrixplanner Robert Ross, who contacted the master fund after a number of his clients received letters, agrees with Austin’s explanation, stating the other Matrix planners in the same situation had once worked with Prudential, acquired by Colonial First State, which in turn was picked up by CBA.
Austin says CBA has written to each adviser and explained the reasons for their clients receiving the letters as well as the products involved.
He says the dealer groups have also been contacted and kept informed, and if the advisers were comfortable with the current situation, CFS would contact the clients once again to explain.
Despite the severity of the breach Austin says those dealer groups contacted so far have indicated they understood the nature of the breach and the efforts made by CBA to rectify the issue.
This sentiment was echoed last week by Matrix national marketing manager Geoff Martin who said the dealer group had met with representatives of Colonial First State and the group did not feel it was a deliberate action.
AUTHOR
Jason Spits
Recommended for you
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments for investments.
Inefficient data processes and systems mean advisers are spending over half of their time on product implementation and administration at the expense of clients, according to research.
With the regulator announcing its enforcement focus for 2025 last week, law firm Hall & Wilcox examines the areas which have dropped down the list in priority for the regulator.
