Wednesday, July 02, 2014

FOFA. How the Commonwealth Bank got what it wanted, quietly

When someone is proud of what they have done they make an announcement. When someone is not, they keep quiet. With no announcement whatsoever last Thursday morning finance minister Mathias Cormann had the Governor-General sign into law regulations that neutered parts of Labor’s financial advice rules.

The Financial Planning Association is generally supportive of Labor’s rules. The Commonwealth Bank is not. In the runup to the election it gave the Coalition $56,000. It wants to continue to reward its staff and advisers for steering customers into the bank’s own products. So severe is the pressure that a union survey obtained by Fairfax Media this week finds stress, depression and bullying among staff as they try to meet expectations.

A few hours after the Governor-General quietly signed the changes into law thursday morning the Senate economics committee called for a royal commission to the behaviour of the financial planning division of the Commonwealth Bank.

It found “forgery and dishonest concealment of material facts".

On Thursday Mathias Cormann said he would comment on the report when he had “worked my way through it”. At no point did he acknowledge that earlier that day he had had the Governor-General sign into law regulations that would enable the bank to keep rewarding staff for the volume of business they wrote, one of the practices that concerned the Senate inquiry...

The next morning on the ABC’s AM program he called on the Commonwealth “to provide a proper response to the allegations that have been raised”.

He defended the changes to the financial advice law he was “proposing” saying: “The changes that we are proposing to financial advice laws in no way interfere with what is required in order to ensure that these sorts of events don't happen again.”

At no point in the interview did he acknowledge that he had actually changed the regulations one day earlier.

Later on Friday asked by Fairfax Media when the Governor-General was going to sign into law the regulations Senator Cormann’s office said it “had no idea”. It would make inquiries. It never returned the call.

The Commonwealth Bank got what it wanted, but quietly. It wasn’t the time to make a fuss.

In The Age and Sydney Morning Herald

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