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THE GREED GAMES [email protected]

YOUR DAILY FINANCIAL NEWSPAPER

Syed Abbas Haider Naqvi

YOU CAN BE DECEIVED Among the many scandals leading CBA to end up in the royal commission was the financial “It's the can bank; I've found that they planning scandal which had three can be deceptive; they can be misleading; significant ethical dilemmas; the they can certainly ruin your financial individual financial planners future; they can cover up and they can go unethically and contrary to the out of their way to make life extremely instructions, invested elderly difficult for you” says Merilyn Swann retiree’s savings into high-risk whose retired parents lost almost more than $160,000 of their life savings to the investment products; CBA nurtured devil at CBA disguised as the angel who a sales-based culture among its would help them see through their financial planners; and CBA’s retirement life with ease. CBA’s Financial behavior of covering up the Planners had been enjoying the fruit of misconduct of its financial planners their deceptive advice as part of the and turning a blind eye to the conflict of interest to maximise their wealth and obviously increase the profits unethical practices such as forging for the company. It was a combination of documents and signatures. Instead self-interest and the sales culture of sacking them CBA was actually environment that CBA had implemented rewarding its financial planners for the appraisal of its financial planners with overseas trips and bonuses for that caused thousands of customers to the increased sales and profits. Pictured here is Benjamin Koh, who was CommInsure’s chief medical officer. He was among the few whistleblowers including the likes of Jeff Morrison to unveal the unethical practises conducted in “The emphasis is always on trying to get the maximum share of wallet out of CBA. Source: The Sydney Morning Herald. Rod Gayford who was the compliance officer at CBA said that the bank had good guidelines but unfortunately they were not followed. As per the perspective of CBA’s financial planner these people were working according to the agenda of the company and rewards were solely based on number of sales, hence, they argued we are working to maximise profitability. It is a case of sheer conflict on interest against the clients, as the financial advisers had a commodotised approach and failed to provide products which catered the objectives of the customers. The ethical environment of CBA is suggested to be effected by external factors such as GFC 2008 where self-interest and profits prevailed over customer satisfaction. It is also believed that the lack of proper internal control processes and ethical leadership were among the core issues in this scandal. It was not until the whistle blowers came forward that the senior management became aware of the misconduct in the CFPL. The role of the corporate cop ASIC is also under scrutiny as the regulator is criticised for being complacent, lazy and lacking transparency. ''They have no empathy with victims; they are unwilling to take on big players and consider no one has any value other than someone that works at the organisation. It seems that there is an organisational arrogance and significant cultural issues that seemed not to be addressed by the current management'' says Jan Braund, who was one of the victims of misconducts of CFPL. Her views are shared by the likes of her who had an interation with the corporate watch dog in one way or another. Former Senator Mark Bishop criticised ASIC for responding to the call of Jeff Morris after 18 months, stating that had they been quick in taking action significant damage could have been minimised. However, Greg Medcraft, chairman of ASIC defending the performance of the regulatory body said that the corporations in financial service suggest that ASIC is doing a very good job. The Royal Commission in its final report recommended the government, in consultation with ASIC, review the effectiveness of necessary measures implemented to improve the quality of financial advice. It further recommends that if the customer abiding by the advice of the adviser results in the benefit of the adviser then there is significant conflict of interest and has instructed all Australian Financial Services License holders to be more proactive in detecting misconduct. Justice Hayne also asks for a formation of a disciplinary body to which misconduct can be reported about the financial advisers directly. Talking about ASIC, Mr. Hayne has asked for a clear division of roles and responsibilities between the two regulators i.e. ASIC and APRA. He also urged ASIC to launch legal action when dealing with large corporations instead of simple infringements. This scandal reveals that the ethical behaviour of individuals who are employed as financial planners are influenced by their own ethical beliefs and morals and also by the culture of the ‘sales focused’ industry that they work in. In CBA’s case it was a combination of individual behaviour, the organisational ‘sales’ culture, lack of ethical leadership from middle managers and a lack of proper control of processes that created the unethical behaviour. As CBA assures to implement the regulations laid down by the regulators following the royal commission, to bring unethical behaviour under control, but should consider their own corporate culture and focus on ethical decision making in their organisations.

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