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CBA directors targeted over financial advice scandal

AAP

AAP

Not-for-profit superannuation fund First Super will oppose the re-election of two Commonwealth Bank directors over their handling of the financial advice scandal that scorched the retirement savings of thousands of customers.

Commonwealth Bank (CBA) holds its annual meeting in Melbourne on Wednesday amid public anger over the sales practices of financial planners, which resulted in customers receiving misleading and allegedly fraudulent advice on where to invest their money.

Shareholders will be asked to re-elect longstanding directors Andrew Mohl and Launa Inman who sat on the board throughout the crisis.

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The bank’s record multi-billion-dollar profits in the last decade are partly due to its expanding financial advice businesses that directors now acknowledge gave shoddy advice to customers.

An investigation by The Age earlier this year unearthed fresh evidence of the bank’s shonky practices.

That information is now being investigated by law enforcement agencies including the Australian Securities and Investment Commission to determine whether clients were victims of fraud.

Andrew Mohl Commonwealth Bank board member

CBA board member Andrew Mohl. Photo: AAP

Launa Inman CBA board member

Launa Inman. Photo: AAP

First Super demands answers

First Super holds around 180,000 shares in the bank on behalf of 69,500 members employed in the timber, furnishing and paper industries.

Chief executive Bill Watson said the fund had decided to vote against re-electing Mr Mohl and Ms Inman because it believed the reputational fallout from the scandal had impacted shareholder value.

Mr Watson noted that a Senate committee had found the bank’s planners acted with a “callous disregard for clients’ interests” between 2006 and 2010.

“Our fund is making sure that whatever investments we have the members should get the best value,” he said.

“Directors who served on the CBA board during this time must be held accountable.

“First Super will accordingly vote against the re-election of board members Andrew Mohl and Launa Inman.”

Mr Watson said it was the fund’s view that the bank did not do enough to remedy the cultural problems in the financial planning arm when they were first made known to the board.

“Aside from the very real damage to customers, the failure by the board has led to loss of confidence in the organisation, harming the bank’s reputation and impacting on shareholder value,” he said.

“More should have been done by the directors, including Mr Mohl who is recognised as a financial services expert.”

Mr Watson said he was keen to meet with CBA chairman David Turner to discuss important issues stemming from the scandal.

Stephen Mayne’s bid

Shareholder advocate Stephen Mayne will meet with CBA chairman David Turner on Tuesday to discuss the reputational damage that the financial planning scandal has had on the group’s earnings prospects.

Mr Mayne is running for the board, and if elected, is promising to put the financial planning business on an ethical footing.

“The bank’s financial advice arms have suffered financial and brand damage from a lack of board oversight,” he said. “The directors fiddled while Rome burned.”

Mr Mayne highlighted Mr Mohl’s deep experience in the wealth management industry as a former managing director of AMP.

“There’s probably no-one else in Australia more associated with defending the financial planning model,” Mr Mayne said.

“He, more than anyone else on the board, should have been alive to these issues.”

CBA’s annual meeting will be held on Wednesday morning at the Melbourne Convention and Exhibition Centre.

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