Royal Commission queries CommFP on two-year breach delay
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has queried whether Commonwealth Financial Planning (CommFP) may have delayed by two years in breach reporting a fee for no service exposure.
Senior Counsel assisting the Royal Commission, Michael Hodge posed to the Commonwealth Bank’s Marianne Perkovic that a memorandum she had received in 2012 should have prompted her to recognise the fee for no service issue.
The breach was eventually reported in 2014.
Hodge pointed to a memorandum which referenced 257 clients resulting from what it described as a “very limited and brief review” of the consequence of adviser departures.
However, Perkovic who was at that time working within Commonwealth Financial Planning, argued that, taken in context, the memorandum would not necessarily have warned the company of its status with respect to a breach and that it merely suggested that there were around 250 clients at that point in time who had not been allocated to an adviser.
She said the memo suggested there was a problem, but she did not know the extent of the problem.
Hodge then suggested to Perkovic that she was dissembling and that she was doing so to avoid explaining why it took two years two notify ASIC of the breach.
The exchanges between Perkovic and Hodge led the Royal Commissioner, Kenneth Hayne QC to listen more attentively to Hodge’s questions and answer them directly.
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