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Australia bank chief 'truly sorry' for financial scandal

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(Globalpost/GlobalPost)

The head of Australia's biggest bank Thursday said he was "truly sorry" for a major financial scandal in which thousands of people lost their life savings.

Commonwealth Bank chief executive Ian Narev admitted staff at the group's financial arm provided poor advice to customers between 2003 and 2012 that cost many of them dearly.

"To all the customers who received poor advice I apologise unreservedly," he told reporters in Sydney.

"We are truly sorry and we acknowledge the financial hardship that you suffered as a result of the poor advice."

His long-awaited apology came a week after a Senate committee report called for a national inquiry into the scandal at the country's biggest listed firm, amid allegations of forgery, fraud and cover-ups.

It recommended an examination of not only the bank but the apparent failure of the Australian Securities and Investments Commission, the corporate watchdog, to effectively identify and crack down on wrongdoing.

Thousands of people were affected after bank advisers placed them on risky products -- including forging signatures in some cases -- before the global financial crisis as they chased large bonuses.

The products collapsed, leading to the loss of millions of dollars.

The Senate inquiry found the bank, which has a market capitalisation of Aus$131 billion, then underpaid the victims through compensation, allegedly tried to avoid scrutiny from regulators and covered up its actions.

Narev said a full internal review would be conducted covering a decade of activities within the bank's financial planning businesses, from 2003 to 2012.

Under the process, customers will be able to request a review of any advice previously given by financial planners, with the option of a further review from an independent panel.

The bank has already paid out compensation of Aus$52 million (US$49 million) to 1,100 people, with the Senate committee recommending the pool available be increased to Aus$250 million.

Some reports suggested up to 12,000 people could have been affected, including the mother-in-law of Treasurer Joe Hockey.

Hockey said the bank's apology and review was welcome, but said it had been too slow to act.

"Firstly you have to recognise the problem exists and for a long period there was denial," he told reporters.

"The second thing is you've got to show appropriate contrition for what happened. Now they've done that.

"The third thing is you've got to have a plan to ensure people are given appropriate compensation. They are starting to do that, but there's obviously a long way to go."

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http://www.globalpost.com/dispatch/news/afp/140703/australia-bank-chief-truly-sorry-financial-scandal