CBA chief executive apologises; ASIC commences litigation against payday lenders: Midday Roundup

The Commonwealth Bank’s chief executive officer Ian Narev has said he “unreservedly apologises” to customers affected by poor financial planning advice, in the wake of a senate committee review of its practices.

“Trust goes to the heart of a relationship between a financial institution and its customers,” Narev said.

“At the centre of the matters, which a recent Senate Committee reviewed, is the very disturbing fact that some people working for our Commonwealth Financial Planning (CFP) and Financial Wisdom (FWL) businesses breached that trust. They failed in their primary obligation – to act in the best interests of our customers.”

“We know this is unacceptable and I unreservedly apologise to all customers affected. Poor advice provided by some of our advisers between 2003 to 2012 caused financial loss and distress and I am truly sorry for that.”

Narev also announced a ‘far-reaching’ review into the CFP and FWL programs.

“This program demonstrates our commitment to make it right for our customers.”

ASIC commences litigation against payday lenders

The Australian Securities and Investment Commission has started legal action against two payday lending businesses, alleging they are avoiding their responsible lending obligations.

The watchdog has commenced proceedings in the Federal Court against Gold Coast-based Teleloans and Finance & Loans Direct.

The companies claim they do not have to comply with certain consumer protection laws because their loans are exempt under a short-term credit exemption.

But ASIC claims the payday lenders must comply with all obligations set out in the National Credit Act. These include specific responsible lending obligations, as well as caps on fees and charges that relate to so called payday loans.

ASIC Deputy Chairman Peter Kell said in a statement: “These proceedings will ensure that payday lenders do not deliberately structure their businesses to circumvent laws that protect consumers. This is particularly important as the consumers who access these small amount loans can be financially vulnerable.”

Share market opens slightly stronger

The Australian share market pushed higher at opening after both the Dow Jones and the S&P500 reached record highs for the second session in a row, on the back of positive jobs figures.

At the official market opening, the benchmark S&P/ASX200 index added 17.3 points, or 0.32%, to 5,472.7 points, while the broader All Ordinaries index gained 17.4 points, or 0.32%, to 5,459.1 points.