CBA fallout widens as government mulls compo

The Abbott government has put intense pressure on Commonwealth Bank chief executive Ian Narev to make a more ''considered'' public response to the bank's financial planning scandal, possibly including a beefed-up compensation scheme costing hundreds of millions of dollars.

The government's efforts to squeeze a more generous settlement from the bank comes as it seeks to shore up political support for its controversial wind-back of consumer protections in the former Labor government's Future of Financial Advice (FOFA) laws.

A Senate inquiry this week called for a royal commission into the bank because the regulator, the Australian Securities and Investments Commission, was ''reluctant to actively pursue misconduct''.

Mr Narev is also believed to be under pressure from the government to reshuffle executive ranks over the debacle.

Pressure is also mounting from within the bank for Mr Narev, who has been largely absent from the public debate over allegations of forgery, fraud and a management

cover-up within CBA's financial planning division, to step into the spotlight ''so clients can see the bank is taking it seriously''.

ASIC chairman Greg Medcraft on Friday admitted there was ''an issue with trust and confidence in the financial advice industry''. He said the industry ''has to win the confidence of Australian consumers''.

Finance Minister Mathias Cormann this week met Mr Narev to discuss the scandal and the Senate inquiry's findings. On Friday, Senator Cormann was talking down the inquiry's recommendation for a royal commission into CBA.

There has only been one royal commission focusing on a single company in living memory, into the collapse of insurer HIH in 2001.

Broadcaster Alan Jones, the Greens and industry super funds have thrown their weight behind a royal commission, with Jones asking Prime Minister Tony Abbott to call one ''immediately'' during his breakfast radio slot on 2GB on Friday. However, Senator Cormann said arguments against a royal commission mounted in a dissenting report tabled by the committee's deputy chairman, Liberal senator David Bushby, were ''persuasive''.

In a statement, CBA also pointed to Senator Bushby's six-page dissent, and said it had ''worked openly and transparently'' with the inquiry and ASIC.

Senator Cormann said: ''I have spoken to Ian Narev about the findings of the Senate Economics Committee today and I am confident that he and the CBA will have more to say by way of a considered response to their report next week.''

He dismissed suggestions the government should reconsider its rollback of FOFA, saying that the financial planning industry had ''worked hard to lift professional, ethical and educational standards'' since the CBA debacle, which ''happened some time in the past, incidentally over the period of the previous government''.

Australian Electoral Commission records show that last year the Liberal Party's Cormack Foundation reaped $938,400 from dividends earned from CBA shares. A spokeswoman for Senator Cormann said the money played no part in the minister's decision.

While the CBA has issued seven public statements on the financial planning scandal since June last year, when Fairfax Media first revealed allegations of misconduct, Mr Narev is not quoted in any of them.

A CBA spokeswoman said Mr Narev was not available for comment.

While not ruling out that a royal commission might eventually be needed, opposition financial services spokesman Bernie Ripoll said the government should first look at the results of inquiries already under way.

The story CBA fallout widens as government mulls compo first appeared on The Sydney Morning Herald.

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