Regulator points to new CommFP culture
The Australian Securities and Investments Commission (ASIC) has used its fourth major submission to the Senate inquiry to point to a brand new culture at Commonwealth Financial Planning (CommFP).
ASIC claims the changes for the better, including new management, team culture and risk management systems at CommFP, were a result of the enforceable undertaking the Commonwealth Bank-owned financial planning business entered into with the regulator.
CommFP paid out approximately $51 million to clients affected by what was deemed inappropriate advice provided by several rogue planners, including Don Nguyen and Anthony Awkar.
In April 2013, CommFP announced a complete redesign of its adviser remuneration framework, which saw behavioural criteria and customer satisfaction being taken into consideration with regards to short-term bonuses.
"CommFP developed a roadmap to achieving its desired culture of providing ‘quality advice' and ‘making money safely'," ASIC stated in its submission.
"CommFP's commitment to this cultural shift has been supported by developments over the past two years, including restructuring the business in May 2012 to separate the advice business from the product manufacturing business; changes to the assessment criteria for remunerating staff — that is, changes to KPIs and the remuneration framework."
Furthermore, there was a significant increase in transparency of adviser monitoring with the introduction of Connect — a new technology-based risk management system.
"As a consequence of CommFP entering into an enforceable undertaking with ASIC, CommFP has fundamentally reshaped the risk management framework of its business," ASIC added.
ASIC sought to deal with the issues identified with Commonwealth Financial Planning on a systemic basis, which was its reason for entering into an EU with the group, the regulator said.
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