The Commonwealth Bank's financial planning division.

Monday 5 May 2014

THIS PROGRAM IS THE GOLD WALKLEY AND WEEKLY TV CURRENT AFFAIRS WALKLEY WINNER FOR 2014.

This is a story about ordinary Australians taking on Australia's biggest bank. It begins with a dying man who believed the Commonwealth Bank wronged him and who was forced into a David and Goliath legal battle in the last six months of his life.

"It's going to be very hard for me to trust anyone at any bank at any given time because they were just ruthless... They knew he was an easy target and they just went for it," his daughter told Four Corners.

This week in a joint Four Corners/Fairfax investigation, reporter Adele Ferguson examines a sales-driven culture inside the Commonwealth Bank's financial planning division that has been described as profit at all cost - a culture that has been built on commissions.

The program also looks at the wilful practices of another financial planner, whose annual salary was almost half a million dollars. The CBA protected him until a whistleblower and several of his clients fought back.

The planner's customers, mostly retirees, believed the Commonwealth Bank when it said it was 'the people's bank'. But when they saw their life savings disappearing as a result of bad advice, they knew they had to act. Adele Ferguson tracks down the planner.

This story reveals how those customers who believed they were wronged took on both the bank and the corporate regulator, ASIC, and won. There are others who didn't fight and may have lost their life savings.

The CBA says it has since cleaned up its act and there is no place for so-called 'rogue' financial planners.

The program comes at a time when Australia's biggest banks are trying to expand a system that rewards bank tellers and financial planners for selling their products to customers.

The Federal Government also wants to make changes to the financial advice legislation that would reintroduce some of the commissions and kickbacks that had been banned under the previous government. If the reforms go ahead it will potentially mean financial planners are less, not more, accountable to their clients.

This program is a sobering lesson for all.

If you have money to invest or you are setting yourself up for retirement this is a program you cannot afford to miss.

BANKING BAD, a joint Four Corners/Fairfax investigation reported by Adele Ferguson and presented by Kerry O'Brien, goes to air on Monday 5th May at 8.30pm on ABC1. It is replayed on Tuesday 6th May at 11.00am and 11.35pm. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners.

TRANSCRIPT

Banking Bad - Monday 5 May 2014

KERRY O'BRIEN, PRESENTER: A modern David and Goliath classic except that, while David wins, he dies and Goliath lives on to repeat his exploits.

Welcome to Four Corners.

Australia's four biggest banks now control 80 per cent of the nation's financial planning industry and they're fighting hard to dominate the private wealth sector, contributing billions to their profits.

The public face of this hunt for fatter profits is the humble bank teller, and behind the teller, the financial planner. But when they ask if the bank can help you plan for your financial future, for your own sake, you have to ask, "What's in it for them?"

Indeed, you might liken a tellers job these days to the person behind the counter in a service station: you go to pay for petrol, and they try to sell you confectionary and drinks.

Tonight, we feature three families, almost brought to financial ruin after the Commonwealth Bank steered them out of safe harbours, into stormy seas, without ever explaining the risks.

When watching what is about to unfold, bear in mind that, until Assistant-Treasurer Arthur Sinodinos was recently forced to step down under questioning from the New South Wales anti-corruption body, ICAC (Independent Commission Against Corruption), the Abbott Government had planned to soften the previous government's regulatory protection for consumers of financial services, in favour of the big banks.

That's on hold for now.

Despite repeated requests, the Commonwealth Bank declined to be interviewed for this program.

This report is a joint investigation by Four Corners and Fairfax Media.

The reporter is Adele Ferguson.

ADELE FERGUSON, REPORTER: It's June 2012.

A wintry afternoon in the beachside town of Shellharbour in New South Wales.

Inside this rented brick veneer cottage, Noel Stevens draws a menacing face on the window.

(Footage from Teghan Couper's home video)

TEGHAN COUPER, NOEL STEVENS' DAUGHTER: Dad why don't you tell everyone what you're drawing here?

NOEL STEVENS: Why?

TEGHAN COUPER: Because I've got you on film. Look. Say "Hi".

NOEL STEVENS: Hello.

ADELE FERGUSON: Noel is dying of cancer; he's high on morphine.

His daughter Teghan is recording the last weeks of his life.

TEGHAN COUPER: Say, "I love you, my whole family."

NOEL STEVENS: I love you my whole family.

ADELE FERGUSON: It was never Noel's plan to end his days like this.

Noel had a life insurance policy with the bank.

When he was diagnosed, his plan was to use the money to buy a house for his last months and that house would be left to his family.

TEGHAN COUPER: Smile!

NOEL STEVENS: I'm exhausted just doing that window.

TEGHAN COUPER: They basically just turned around to him and said, "No, your policy doesn't exist anymore. You won't be getting any money."

ADELE FERGUSON: Did he feel robbed by the bank?

TEGHAN COUPER: Absolutely.

ADELE FERGUSON: Noel knew he couldn't beat the pancreatic cancer that would kill him, but in his dying days, he took on a legal battle and the opponent was almost as merciless.

It was the Commonwealth Bank.

ADELE FERGUSON: Would this be one of the most important cases that you've battled?

MARTIN CULLETON, NOEL STEVENS' LAWYER: Oh absolutely, there's no question about that.

It was a privilege, is the best way I can put it to act for them.

ADELE FERGUSON: What do think made him keep fighting?

MARTIN CULLETON: The need to provide for his family and simply that he felt it was wrong.

ADELE FERGUSON: A year before Noel Stevens was diagnosed with cancer, he was working as a scaffolder and living in Frankston, Victoria, caring for his invalid mother, Daphne.

Noel had a water tight life insurance policy with Westpac - a policy he'd had for seven years worth almost $300,000.

It was guaranteed to pay him out if he ever got sick.

ADELE FERGUSON: Did your Dad ever talk to you about life insurance?

TEGHAN COUPER: No, not at all. He was already covered with Westpac, so he didn't need anything more.

(Sound of phone ringing)

ADELE FERGUSON: In early September 2010, the phone rang.

It was the local Frankston Commonwealth Bank, inviting Noel to come in and speak with their financial planner.

JEFF MORRIS, FORMER CBA FINANCIAL PLANNER: The role of the teller is to steer banking clients on to the planners to provide opportunities, um and they're given targets for referrals each week.

ADELE FERGUSON: If the teller succeeds in getting Noel to see a financial planner and sign up for a bank product, he stands to get a bonus worth hundreds of dollars and the financial planner will get even more.

Noel knew none of this.

TEGHAN COUPER: He walked into the Commonwealth bank thinking that they were helping him, not that they were going to get commission, not that they were trying to do something for their own benefit.

JEFF MORRIS: So, a lot of people, what they don't understand is that the teller will be looking up their details on the bank's information system, identifying if they could um be eh sent to a planner, if there were some opportunities there for the planner.

ADELE FERGUSON: Inside the Commonwealth Bank, the financial planner looks at Noel's details.

Noel had few assets: less than $5,000 in his Commonwealth Bank savings account, no property, a small super fund and his weekly wages went into his bank account

But Noel Stevens did have that Westpac life insurance policy.

If Noel switched his policy to the CBA, it would be a win for the bank.

JEFF MORRIS: The emphasis is always on trying to get the maximum share of wallet out of each customer.

FINANCIAL PLANNER (voiceover): Please take a seat

ADELE FERGUSON: At the Frankston CBA branch, Noel Stevens turned up for his 11:30 appointment with the bank's financial planner.

(Footage of Commonwealth Bank advertisement)

COMMONWEALTH BANK ADVERTISEMENT: You may be surprised by how affordable a financial planner really is and what price would you put on the peace of mind that comes from having a plan...

ADELE FERGUSON: Known as the wealth management division, a big part of their business is selling: selling shares, property funds and insurance to their customers.

This division manages $190 billion of customer's money; it's worth $743 million in profit a year to the bank.

COMMONWEALTH BANK ADVERTISEMENT: ...and helping to design a plan that helps you achieve your goals.

ADELE FERGUSON: Banks now own or control up to 80 per cent of the country's financial planners.

JEFF MORRIS: The planners are actually been incentivised or forced, in a way, to give advice that's not in people's best interests, and the whole system is really structured to bring that about.

FINANCIAL PLANNER (voiceover): Mr Stevens, tell me about your...

ADELE FERGUSON: Inside the Frankston branch, the financial planner asks Noel Stevens a series of questions about his job, his financial status and, crucially, his medical history.

TEGHAN COUPER: Dad was just so trustworthy; he didn't think for one second that they weren't doing it for his best interests.

ADELE FERGUSON: Noel is told he will get the same insurance protection as he receives from Westpac.

This wasn't true.

MARTIN CULLETON: I was surprised that um they were so quick to advise him to cancel one policy, which is Westpac, to move to another. Um because he had security there from that policy. And, the reality is, the difference between the Commonwealth policy and the Westpac one was not that huge.

JEFF MORRIS: There's very clear moral obligation, and indeed fiduciary duty, to make sure that you're not putting at risk what Mr Stevens had when you moved that policy.

So, I would have thought um a greater degree of caution was required there in terms of going through those answers very carefully and making sure that you were not putting him in a situation where he'd be replacing a valid in force policy with one in which the insurance company, as it turned out, turned around and said it's not valid

FINANCIAL PLANNER (voiceover): Cysts, moles, sun spots?

ADELE FERGUSON: With Noel Stevens' life insurance policy now in the bag, it's a win for the bank.

It scores a new policy holder and an annual premium of $1,482.

The teller pockets a referral fee of $444.60.

And the planner, he receives an $815 kickback, plus an ongoing annual commission.

ADELE FERGUSON: What would happen to a planner if, if that planner didn't convince the customer such as Noel Stevens to swap from the Westpac life insurance policy to the Comm Bank insurance policy?

JEFF MORRIS: Um well, he wouldn't remain a Comm Bank financial planner for very long. Uh, if he didn't sell that policy to Mr Stevens, he would've had to have sold a policy to somebody else. Um it's a sales culture.

TEGHAN COUPER: Look at the camera and say hello. Say 'Hi Nanna'. It's a recording

ADELE FERGUSON: In 2011, Noel and his mother Daphne moved to a seaside community south of Sydney to live with Julie, Noel's sister and to be closer to his daughter, Teghan.

He had moved into a caravan on his sister's property.

He was diagnosed with pancreatic cancer.

Noel was given six months to live.

TEGHAN COUPER: I just remember dropping the phone and just, just being absolutely devastated. From that moment, my whole world, life as I knew it, turned upside down.

ADELE FERGUSON: Noel, with only months to live made a claim on the CBA life insurance policy, the policy he'd been encouraged to take; a policy that would pay Noel almost $300,000.

He got a response from the bank two days before Christmas 2011.

TEGHAN COUPER: We didn't even feel like it was Christmas; it was such a black time. I vividly remember my dad becoming rapidly distressed and, you know, yelling at the phone. And, I just remember him storming straight out the back, and I knew something bad had happened; something wasn't right.

ADELE FERGUSON: Noel had received a letter from the Commonwealth Bank telling him his policy was void.

It had been rejected, with the bank claiming he had not been honest about his medical history.

TEGHAN COUPER: They basically turned around and said to him, "No, your policy doesn't exist anymore; you won't be getting any money."

JULIE HOLLOWAY, NOEL STEVENS' SISTER: He's like well, "What have I been paying into. Like, you know, that's my life insurance; I've been told I'm in entitled to it." And when he got off the phone to them he was just devastated. He just felt like he was beating his head against a brick wall, that they weren't listening to him.

TEGHAN COUPER: How can you even breathe when you've got children and you have an elderly mother and a sister and you don't own a house, you don't have anything, you don't even get your money?

ADELE FERGUSON: From that moment Noel Stevens lodged the claim, the bank ruthlessly investigated him.

Those promises he would be better off quickly evaporated.

A clause in his policy was used to trawl through his medical records to build a case that Noel Stevens had deceived them.

ADELE FERGUSON: The letter included extracts from his meeting with the planner. The questions required a Yes or No answer.

EXCERPT FROM CBA LETTER TO NOEL STEVENS (voiceover): In the last 5 years, have you been advised or received counselling or treatment for alcohol or substance abuse?

Answer, "No".

Actual Position: You consulted the Frankston Medical Centre and the notes read as follows:

15 of November 2009 - Drinks 8 stubbles every night. Counselled about alcohol

ADELE FERGUSON: Over the following months, the bank scrutinised his bank statements including itemising his alcohol purchases from liquor outlets.

TEGHAN COUPER: Of course he loved a beer, but a beer and being an alcoholic are two worlds apart.

(Footage from Teghan Couper's home video)

NOEL STEVENS: What's nanny doing? We're going to see nanny; she's watching Elvis Snezley; where is he?

I can dance like him.

See look.

See, I can do that, Nanny.

DAPHNE HOLLOWAY, NOEL STEVENS' MOTHER: Yeah, I know.

ADELE FERGUSON: With a few months left to live Noel Stevens was determined to fight for his money and his dream to look after his family.

NOEL STEVENS: It looks good Teags.

TEGHAN COUPER: It's dill.

NOEL STEVENS: You are a dill.

TEGHAN COUPER: I wasn't just trying to impersonate Elvis Presley.

NOEL STEVENS: No, I did. I didn't impersonate him; he took after me.

ADELE FERGUSON: Noel and his family moved into a rental cottage and made an appointment to see a local lawyer: Martin Culleton in Kiama.

(to Martin Culleton)

What was your impression of him? When you heard his story, what was your impression?

MARTIN CULLETON: Oh immediately I felt that he was telling the truth.

(to Noel Stevens)

So Teghan please come this way.

ADELE FERGUSON: As Noel's health deteriorated and the pain became unbearable, Teghan went alone to see the lawyer.

Martin Culleton tried to reach a settlement with the bank over the $300,000 policy payout.

The bank refused to settle.

MARTIN CULLETON: Why the bank didn't resolve it, because it wasn't that much money, I don't know; I can't answer that, but certainly it would've been a case that you would think they could've done shall we say.

ADELE FERGUSON: The Commonwealth Bank also continued to deduct monthly insurance premiums from his CBA bank account.

ADELE FERGUSON: And during this time that Noel was dying and you'd taken on the case, were they still taking out his premiums?

MARTIN CULLETON: Yes, they were.

ADELE FERGUSON: It was May 2012 and Noel was too sick to appear in court.

Weeks away from dying, Noel was determined to see the case through.

In his tiny living room, lying on the couch in his pyjamas, with nurses feeding morphine into his body, the bank's lawyers cross examined him.

TEGHAN COUPER: And, um, he just kept asking questions, and then ah Dad just started bawling his eyes out and broke down. And I just thought, "How could you do that to someone like this?" Like, I couldn't believe it.

ADELE FERGUSON: Days after the trial, Noel went into palliative care.

TEGHAN COUPER: Here you are, have a drink of water, Dad. Your mouth's a bit dry, have a bit of water. Have a nice big drink.

ADELE FERGUSON: He had become so sick that Teghan could no longer look after him.

Noel had fought hard, but the cancer was about to beat him. Then the call from Martin came with news about his battle with the bank.

Noel had won the case.

TEGHAN COUPER: He was in a coma-like state, and I got the call and I just remember thinking, "I wish Dad was just awake." I went straight to palliative care and I got on his bedside and I was with Julie and I just remember saying like, "You won! Everything's going to be fine! All the hard work you did, it's done; you won!"

JULIE HOLLOWAY: Teghan and I were either side of his bed and I believe that he understood us, um and he tried to put like three fingers up, um I think he was trying to say did he win the full amount.

ADELE FERGUSON: The court found that the Commonwealth Bank was "negligent" and demonstrated "misleading and deceptive conduct".

It said the financial planner did not act in Noel's best interests when he advised him to switch life insurance policies. It said commissions and kickbacks might have influenced his advice.

The case was a big win for one individual taking on the deep pockets of the bank.

MARTIN CULLETON: This wasn't, however, a case where we can say that the financial planner acted in a rogue fashion. This was almost a systemic type approach to it.

ADELE FERGUSON: On July 6, three days after winning the case, Noel Stevens died.

As Teghan was organising his funeral, she received a call from Martin Culleton that the bank had appealed the case.

TEGHAN COUPER: It's going to be very hard for me to trust anyone at any bank, at any given time, because they were just ruthless. They did not, they did not care at that point in time. They knew he was an easy target, and they went for it.

ADELE FERGUSON: Two years before Noel was signed up for his life insurance policy with the bank, there was a financial planner working on Sydney's north shore who was becoming increasingly uneasy about the sales culture at the bank.

(Footage of Jeff Morris on a train)

TRAIN ANNOUNCEMENT: This train will stop at Chatswood.

ADELE FERGUSON: Jeff Morris worked as a senior financial planner at the Chatswood branch because it was a quick train ride to home.

It was here Jeff worked with Don Nguyen: a man known by his colleagues as Dodgy Don.

JEFF MORRIS: I first encountered a traumatised client in September of 2008, so about six months after I started there, and ah they came into the branch ah asking to see somebody else.

In fact I think they said they thought he was a crook. And the branch staff actually knew who it probably was; they were able to guess from that that it was probably Don because um the legend was so well established.

ADELE FERGUSON: In 2008, Don Nguyen was one of the bank's top planners.

At the Chatswood branch, he had 1300 customers who invested their money with the bank.

ROBYN BLANCH: He was ah so high up, you know, we thought, "Oh well, he has to be um you know a good person to see", yes.

(Footage of a Commonwealth Bank advertisement)

ADELE FERGUSON: Don had pushed more than $100 million of customer money.

And this star performer was rewarded with commissions and overseas trips by the bank. It turned a blind eye to some of his practices

In 2007, Don Nguyen's legendary ability to sign up new customers scored him number one in the bank's internal financial planning league table.

That year, Don signed up $39 million of customer's money for the bank - more than three times his target.

Don's annual pay hit almost half a million dollars.

In the same year retirees Merv and Robyn Blanch met Don Nguyen to invest their life savings of $260,000.

ROBYN BLANCH: He sort of told us how he'd done so well himself and how much money he had made, and he sort of said we were losing money with the way we had our investments going.

ADELE FERGUSON: Merv Blanch worked hard all his life.

(Footage of Merv Blanch's film)

He was also a keen cameraman.

In 1961, when he was principal of Coolah Central School in north west New South Wales, he made a film of a typical school day.

The film featured an introduction of the Commonwealth Bank in the school.

The Commonwealth Bank had always been the Blanches' bank.

MERV BLANCH: We'd taken our mortgage with our house with the Commonwealth Bank and we even had shares in the Commonwealth Bank. So the Commonwealth Bank was the way to go as far as we were concerned.

ADELE FERGUSON: And Robyn, did you agree with that? Was it the trust factor?

ROBYN BLANCH: Oh yes, yes. I trusted the Commonwealth Bank.

ADELE FERGUSON: At their meeting with Don, the Blanches told him they didn't want to be put into high risk products. They said they wanted to live on $1500 a month.

A year later, things start to fall apart.

(Sound of phone ringing)

ROBYN BLANCH: Hello.

ADELE FERGUSON: It was November 2008 and the couple's investment had fallen by half, which would squeeze their monthly living allowance.

ROBYN BLANCH: He asked us to come down to $1200, then he asked us to come down to $500.

ADELE FERGUSON: Five-hundred dollars a month to live on?

ROBYN BLANCH: Yes, and then he asked us to come down to nothing.

ADELE FERGUSON: Goodness me! How did you feel?

ROBYN BLANCH: Well, devastated at the time, and we could see our investments were going down all the time, you know, from what we had.

ADELE FERGUSON: What the Blanches didn't know was that they were not alone.

Financial planner Jeff Morris was discovering dozens of Don Nguyen's victims who were also losing their life savings.

Jeff Morris had no faith the bank would do the right thing.

JEFF MORRIS: In the case of Commonwealth Financial Planning, the system was set up to allow people to operate the way Nguyen did. It was not set up to provide quality advice to people. It was set up to push product and push CBA product. It's as simple as that.

ADELE FERGUSON: Warning bells were sounding inside the bank. A senior executive started to worry about compensation. During a conversation with Don's boss, the executive took notes:

EXCERPT FROM CBA EXECUTIVE NOTES (voiceover): If we pulled Don out, huge compensation issue for Commonwealth Financial Planning. Better to work for clients' best interests to resolve all issues.

JEFF MORRIS: We were told he'd been suspended for fraud and wouldn't be coming back which seemed appropriate. But then, all of a sudden, Don was returned and indeed promoted to senior planner, and so the other planners and I who'd seen some of these distressed clients, we realised something wasn't right

ADELE FERGUSON: Over a beer with mates, Jeff Morris knew he had to act.

JEFF MORRIS: It was at that moment that I realised that ah, if we didn't do something about it, that hundreds of clients eh were going to have lost you know a third, half their capital ah through no fault of their own.

In fact, these clients were going to be snowballed and duped, and ah that the bank would deny them compensation.

ADELE FERGUSON: Later that evening, Jeff wrote a letter to the corporate regulator ASIC (Australian Securities and Investments Commission). He outlined corruption and misconduct and how innocent people were losing their life savings.

The letter, sent on October 30, 2008 also warned of a cover up inside the bank.

JEFF MORRIS: It was about a high level cover up at Commonwealth Financial Planning ah to conceal the um the uh corruption, misconduct of uh Don Nguyen and to defraud clients of compensation in the tens of millions of dollars.

ADELE FERGUSON: You also mentioned that it was systemic, that it was a sales-driven culture?

JEFF MORRIS: Don was a perfect storm that drove right through that that loose structure and took it to the absolute nth degree, which is why his clients were more exposed than anybody else's, but he wasn't he was by no means the Lone Ranger.

ADELE FERGUSON: It would take ASIC 16 months before launching a formal investigation into the bank.

In the meantime, victims such as the Blanches would be forced to fight tooth and nail for what was rightfully theirs.

(Footage of Merv's home video)

Merv's camera recorded family life, his children, grandchildren and retirement.

WOMAN: Hi Mervyn! I know you love that.

ADELE FERGUSON: But it didn't record the dark days of 2009 when the couple's life savings crashed by two thirds, forcing them on to Centrelink.

MERV BLANCH: We had been self-funded for 22 years. It seemed incredible that you could put over a quarter of a million dollars away and in a few months time it had been eroded by two thirds. It just didn't seem possible.

ADELE FERGUSON: Their daughter, Merilyn Swan, became increasingly worried about her parents mental and physical health.

MERILYN SWAN, DAUGHTER: They had lost their dignity; they were now on a Centrelink payment to keep themselves financially afloat. Ah, they were humiliated, depressed. Dad had suffered some very serious health issues, and I felt that, if I didn't step in, this had the potential to shorten their lives.

ADELE FERGUSON: As Robyn and Merv searched for answers, a letter came from the bank, which sent alarm bells ringing.

It said their money was not sitting in eight conservative bank products, but had been put into nine products and most of them were high risk.

MERILYN SWAN: This was the first ah piece of honest communication, I guess I could say, that had come from their interactions with the CBA.

ADELE FERGUSON: Months later, another letter arrived that left them all gob-smacked

Merilyn, now quite the detective, responded immediately.

The letter blamed their financial destruction on the GFC and it believed the financial advice Don Nguyen had given them was appropriate.

But the bank couldn't give them an explanation for how $25,000 of their money had turned up in a mystery ninth product.

For Merilyn, the letter's closing paragraph was particularly galling.

MERILYN SWAN: At the bottom of this letter as an act of goodwill and as no admission of liability, um they could find no reason why the $25,000 had been transferred without authorisation into this ninth product, and on the basis of that, they were offering $6,770 to settle without any further action.

ADELE FERGUSON: The Blanches, at this point, had lost $160,000, yet the Commonwealth Bank were offering a fraction in compensation.

ROBYN BLANCH: Yes, it was just over $6,000.

ADELE FERGUSON: But you lost more than $160,000.

ROBYN BLANCH: That's right, so of course we turned it down. We sort of said, that's of no use to us, so having lost so much money.

ADELE FERGUSON: Merilyn was incensed.

Merv and Robyn had the good sense to keep a copy of all their documents.

When Merilyn compared her parent's original statement of advice with the one the bank had sent, there were striking differences.

MERILYN SWAN: This document had no footers; it contained several pages that weren't in the original documentation. And it also contained four tables that were not in the original statement of advice.

ADELE FERGUSON: So why do you think they were changing the tables?

MERILYN SWAN: To um minimise the liability of the bank to any compensation that we may seek.

ADELE FERGUSON: Once the bank realised the Blanches had kept the original documents, offers of compensation multiplied.

Within six months, the bank had increased their offer from $6,777 to $95,000, but without admission of liability.

MERILYN SWAN: We'd come a long way from $6,777, but it was a very hard road. And, when we opened that letter, we had a discussion and we decided take it, take it because I don't think I can spend another year doing this. And so we settled.

ADELE FERGUSON: As the Blanches were reeling from their experiences with the Commonwealth Bank, there was an insider, Rod Gayford, who was feeling powerless.

He worked at the bank's head office in Martin Place as a compliance officer.

Rod's job was to make sure financial planners followed the rules.

He previously worked for the corporate regulator for 26 years as an investigator and lawyer.

He said the bank had good guidelines; they just weren't followed.

ROD GAYFORD: CBA's got a robust um compliance manual, which I would say, if you followed that particular manual ah you couldn't really go wrong, you know? They're all fairly similar, these compliance manuals, ah but there's a degree to which they're followed. That's ah you know the elephant in the room.

ADELE FERGUSON: Rod Gayford was well aware of Don Nguyen's antics, but his focus was on the conduct of another planner who he suspected was forging customers signatures and putting them in high risk investments for hefty commissions.

Rod suggested the bank hire a handwriting expert.

ROD GAYFORD: You need to engage the services of a proper expert that can give evidence in court.

ADELE FERGUSON: And did they take your advice?

ROD GAYFORD: No. No. There seemed to be some ah problem about the cost.

ADELE FERGUSON: And do you recall what sort of cost we're looking at?

ROD GAYFORD: Oh, it would've been about $5,000.

ADELE FERGUSON: So that was too expensive?

ROD GAYFORD: That was too expensive, yeah, yep.

ADELE FERGUSON: As well as being denied $5,000 to investigate a possible forger, Rod was also frustrated by the lack of staff to police the planners.

ADELE FERGUSON: So the bank says it operates rigorous compliance and risk management framework. Was that your experience?

ROD GAYFORD: No. I don't see how it could with only one and a half compliance officers.

ADELE FERGUSON: So in 2007 when you joined, there was really one and a half compliance officers?

ROD GAYFORD: Yes, yes, yes.

ADELE FERGUSON: Across the 700 planners and looking after 300,000 clients?

ROD GAYFORD: Yep, yep.

ADELE FERGUSON: Rod Gayford lasted at the bank for less than two years.

He felt powerless to do his job.

JEFF MORRIS: They were really toothless tigers in that organisation.

ADELE FERGUSON: And they had to be?

JEFF MORRIS: Well if they wanted to survive, yes. I suspect anybody who'd taken his job too seriously wouldn't have lasted very long.

(Footage of Don Nguyen unloading boxes from his car)

ADELE FERGUSON: In July 2009, the Commonwealth Bank allowed Don Nguyen to resign, with Don citing medical reasons.

Jeff inherited a few of Don's customers, including retiree Jan Braund.

Neither Jan or the bank knew Jeff was the whistleblower.

JEFF MORRIS: She demanded somebody with a few grey hairs, so I was probably the best qualified.

I got a copy of her file straight away.

ADELE FERGUSON: Braund's husband Alan, a former Qantas executive, was in the early stages of dementia when they met Don.

They had trusted him with their retirement savings.

JAN BRAUND: It was a million dollars we wanted to invest. An extraordinary amount of money for two people who started out with absolutely nothing.

ADELE FERGUSON: Don Nguyen made himself available to the Braunds.

(Footage of a photo of Don Nguyen)

This photo was taken by Jan at a meeting in a coffee shop in Chatswood.

He put their money in high risk CBA products where he would earn extra commission.

By 2009, the couple's wealth had fallen more than 50 per cent and Alan's dementia had taken over their lives.

JAN BRAUND: I just can't tell you how devastated I was. At that stage, I'm carrying a man that doesn't know who he is, where he is, what he is, where he's going - nothing - so that then to be told your financial future was absolutely gone, and I couldn't do anything about it.

(Footage of re-enactment of Jeff Morris speaking to Jan Braund)

JEFF MORRIS: Jan I've been through your file, and this is probably the most important document in the whole file. It's an instruction that was sent to para-planning back in 2002 and it makes it very clear down here that you're a conservative investor who wanted to preserve your capital.

JAN BRAUND: Absolutely.

ADELE FERGUSON: This note clearly states the Braunds had a conservative profile and they were extremely concerned and did not wish to use any of their capital in retirement.

Jeff Morris had taken a copy of Jan's complete file before Don had left.

(to Jan Braund)

JEFF MORRIS: Well if it's any consolation, it seems like you weren't the only one. As far as I can make out, all of his clients were treated exactly the same

ADELE FERGUSON: The note was Jan Braund's ammunition to fight for the hundreds of thousands of dollars she'd lost.

But that didn't stop the bank trying to get away with paying as little as possible.

Two-hundred-thousand dollars was offered.

JAN BRAUND: So, I wrote back and said, That's not it; we're not playing that game." And they said they now offered 215,000. So we said absolutely not. This is not an amount of money that you can do; you're robbers, bank robbers in fact.

ADELE FERGUSON: By August 2012, Jan agreed to an $880,000 settlement.

The bank did not admit any liability.

ADELE FERGUSON: Inside the bank it was a different story.

Four Corners has found an internal document that was written two years before Jeff Morris warned the bank about Don Nguyen.

It rated him 'a critical risk' to the bank

And his actions could attract 'a custodial penalty' or 'criminal liability'.

If they had acted on this document, the trauma of hundreds of victims might have been spared.

ADELE FERGUSON: Last month, Jeff Morris and Jan Braund travelled to Canberra to appear at a Senate Inquiry into ASIC's handling of the Commonwealth Bank's financial planning scandal.

JEFF MORRIS: Originally we set out to correct the wrongs of one planner. Very quickly we realised it was a it was an institution that had a problem.

ADELE FERGUSON: They hope the bank will finally be called to account for its behaviour and ASIC to explain itself.

Everyone was there to give evidence.

Jan, Merilyn, Jeff and a handful of executives from the Commonwealth Bank, including its lawyer David Cohen.

Senator Mark Bishop, the chairman of the inquiry, took particular issue with the bank's submission to the Senate which labelled the advice of Don Nguyen and other financial planners as "inappropriate".

MARK BISHOP, CHAIRMAN OF THE INQUIRY: Do you think 'inappropriate advice' captures the seriousness of what occurred here? The fraud, the doctoring of files, the lying to clients, the cheating, the lack of oversight by senior executives? Is 'inappropriate' the exact, correct description?

DAVID COHEN: 'Inappropriate' covers the fact that some of the behaviours, which I think you are alluding to, from some of our people just were not the appropriate behaviours, were not the behaviours that we expect today.

MARK BISHOP: In my mind 'inappropriate' is not systemic fraud, is not systemic theft, is not loss caused by systemic bad behaviour. You know. when my three-year-old writes on the wall, that is 'inappropriate' and you tell her off. Inappropriate's not the word here, is it?

DAVID COHEN: Well Senator, we believe it is.

ADELE FERGUSON: As the day moved into evening, it was then ASIC's turn.

An army of commissioners readied themselves for a grilling by the senators.

JOHN WILLIAMS, FEDERAL SENATOR: It was 16 months before you actually addressed the whistleblower's concerns. Isn't that dragging the whole program out longer for not making contact with the whistleblowers and acting on their information?

GREG KIRK: When we got that contact from the whistleblowers, we should have been back in contact with them, seeking more information straight away.

JOHN WILLIAMS: I think we would all agree with that.

ADELE FERGUSON: ASIC offered a mea culpa of sorts, and then the chairman asked a question of Jeff Morris that would send a chill through executives at the Commonwealth Bank.

MARK BISHOP: When we come to making our recommendations, is the evidence you have heard sufficient that we should recommend that there be a full, properly independent review of all those client files?

JEFF MORRIS: Absolutely, and I suspect a broader review is just going to uncover there are a lot more, like, you know, tens of thousands of clients who are probably entitled to compensation, and it's never been looked at.

MARK BISHOP: Right. Thank you for your assistance today and I hope you're able now to move on and I hope we are able to do the job.

ADELE FERGUSON: There was one key witness missing from this Inquiry.

Don Nguyen.

ADELE FERGUSON: Don Nguyen was a hard man to track down.

We managed to film him outside his family's dry-cleaning business south of Sydney.

He was having a cigarette.

When Don left the bank, he lodged a claim through CommInsure, the same division that refused to pay Noel Stevens $300,000.

JAN BRAUND: He went on sick leave. The bank didn't even make him- didn't sack him. Now here he is a man with a possible criminal intent here and the bank is sort of patting him on the head and saying, "There, there darling. Go off on sick leave. Oh I'm so sorry your depressed."

ADELE FERGUSON: It's almost five years since he resigned.

So far, Don has received more than $300,000 from CommInsure. He can only get the full amount if he's too sick to work.

Don was at home in his Newtown terrace in Sydney's inner west when we tried to talk to him.

(speaking to Don Nguyen)

Don is it possible to talk to you?

He refused to open the door.

Later, when we were driving away, he phoned.

He showed no remorse and it was hard to get a word in

(to Don Nguyen)

Don, Don can I interrupt you for a second...

(voiceover)

Don said he'd done nothing wrong. He was never trained nor reprimanded.

And the advice he gave was within the Commonwealth Bank guidelines.

(to Don Nguyen)

You were never pulled aside?

(voiceover)

He also claimed his customers knew what they were signing.

(to Don Nguyen)

So you resigned in 2009 on stress leave and I've been told that you're getting an insurance policy claim of about $80,000 a year and I just want to confirm that that's correct.

(voiceover)

He ignored my question

(to Don Nguyen)

I just want you to answer the question.

Are you are you working at the-

...dry cleaners.

He hung up; he didn't want to answer the question

(voiceover)

Last year Don Nguyen went with his wife and daughter on a tropical island holiday to the Maldives.

A holiday a man like Noel Stevens only dreamed about.

(Footage from Teghan Couper's home video)

NOEL STEVENS: Come and I'll show you my new boat. That's me boat over here.

TEGHAN COUPER: Oh yeah. Dad has bought a new boat, everyone. There it is.

ADELE FERGUSON: Noel never bought his boat, but he did win the appeal against the Commonwealth Bank.

Noel's family will finally get the $300,000 they were entitled to.

NOEL STEVENS: This black one here, The Marlin.

TEGHAN COUPER: But they had to put us through all of that, and Dad never even got to see that money, never even got to see it.

ADELE FERGUSON: The Commonwealth Bank says it has now cleaned up its act and got rid of rogue planners like Don Nguyen.

But it was no rogue planner who so badly advised Noel.

MERILYN SWAN: It's the can bank; I've found that they can be deceptive; they can be misleading; they can certainly ruin your financial future; they can cover up and they can go out of their way to make life extremely difficult for you.

It becomes a very much a David and Goliath battle.

KERRY O'BRIEN: One last word on Goliath.

The Commonwealth Bank's last full year profit was a record $7.8 billion, and that's about to get another boost.

I should emphasise that both the Commonwealth Bank and ASIC refused to be interviewed for the program. The Commonwealth Bank did provide a statement regarding their treatment of Noel Stevens.

It says, "We acknowledge that the most appropriate action in this case would have been for the customer to have remained with their existing policy."

The full response is on our website.

Next week on Four Corners, Pakistan's hidden shame. The shocking sexual exploitation of thousands of young and vulnerable children. Until then, good night.

END

BACKGROUND INFORMATION

STORY UPDATE

Commonwealth Bank offers customers review of dodgy financial advice | 3 Jul 2014 - The Commonwealth Bank is offering reviews to customers who feel they received poor financial advice.

Senate inquiry demands royal commission into Commonwealth Bank, ASIC | ABC News | 27 Jun 2014 - The Commonwealth Bank is facing the prospect of a royal commission into a fraud scandal that left thousands of its customers millions of dollars out of pocket.

KEY DOCUMENTS

Senate Inquiry Submissions - There were over 400 submissions to the Senate Inquiry into the perfomance of ASIC. You can download submissions from ASIC, Commonwealth Bank, here. Jeff Morris is Submission No.421, Merilyn Swan is No.395, the Blanches are No.300 and Jan Braund is No.244.

Performance of the Australian Securities and Investments Commission | Economics References Committee | 10 Apr 2014 - The Commonwealth Bank's testimony to the Economics Reference Committee, during the Senate Inquiry into the perfomance of ASIC.

Performance of the Australian Securities and Investments Commission | Economics References Committee | 10 Apr 2014 - Read a transcript of ASIC's testimony to the Economics Reference Committee.

Original Court Judgement: [Noel] Stevens v Colonial Mutual Life Assurance Society Ltd & Commonwealth Financial Planning Ltd | 3 Jul 2012 - This is the original judgement handed down in relation to Noel Stevens' case against the CBA.

Appeal Judgement: Commonwealth Financial Planning Ltd v [Teghan] Couper | 16 Dec 2013 - Transcript of the court appeal in Noel Stevens' matter.

RELATED NEWS AND MEDIA

Sales-driven culture within Commonwealth Bank's financial planning division examined | ABC News | 5 May 2014 - The man who sparked a Senate inquiry into the conduct of the corporate regulator and its slowness to act in the Commonwealth Bank financial planning scandal claims he was set up.Read more from Adele Ferguson, Deborah Masters and Mario Christodoulou.

CommInsure adapts to insurance inside super changes | IFA | 5 May 2014 - In the wake of changes to insurance inside super, CommInsure has announced a number of alterations to its product suite, pointing to specific implications for financial advisers.

Insider's view to CBA financial planning scandal | SMH Business | 4 May 2014 - The man at the centre of the Commonwealth Bank financial planning scandal that sparked a senate inquiry has lashed out at the bank, claiming it never properly trained him or supervised his activities. By Adele Ferguson and Deb Masters.

Rollo Sherriff and Meridien Wealth | SMH | 3 May 2014 - How a rock-solid institution backed impenitent maverick, by Adele Ferguson and Four Corners researcher Mario Christodoulou.

Wind back of FoFA will cost consumers | CHOICE | 30 Apr 2014 - The government wants to wind back consumer protections for financial advice. What will it mean for you?

ASIC inquiry revisits CBA debacle | CHOICE | 14 Apr 2014 - A former Commonwealth Bank employee has painted a grim picture of the bank's financial planning division at the government inquiry into the Australian Securities and Investments Commission (ASIC).

Potshots at the vertically integrated | SMH | 11 Apr 2014 - A Commonwealth Bank whistleblower has put the spotlight on the ''ludicrous'' compensation model the bank used to pay out victims of rogue planners and warned of the perils of vertical integration. By Adele Ferguson.

CBA admits failings in Nguyen investigations | Financial Observer | 11 Apr 2014 - Commonwealth Bank of Australia (CBA) has told a Senate inquiry it made the wrong decision in failing to alert the corporate regulator sooner of misconduct claims made against one of its former financial advisers five years ago.

CBA harvested customers for in-house advice | Financial Observer | 11 Apr 2014 - The whistleblower at the centre of Commonwealth Bank of Australia's (CBA) financial advice saga has claimed the bank harvested client databases and used banking staff to funnel customers to its in-house financial advice businesses.

ASIC admits lack of action in CBA probe | SMH | 11 Apr 2014 - The corporate regulator has conceded it knew the Commonwealth Bank had ''sanitised'' its client files during an investigation but failed to take any action.

CBA execs grilled over Nguyen departure | Investor Daily | 11 Apr 2014 - Senior CBA executives have faced questions about the removal of banned Commonwealth Financial Planning adviser Don Nguyen in July 2009.

CBA under fire at ASIC inquiry | SMH | 10 Apr 2014 - Commonwealth Bank's top lawyer, David Cohen, was rebuked before a senate inquiry on Thursday morning for downplaying systematic fraud within the bank's financial services arm as ''inappropriate''.

CBA promoted Nguyen to keep him away from clients | Financial Standard | 10 Apr 2014 - The Senate inquiry into the performance of the Australian Securities and Investments Commission has heard that the Commonwealth Bank promoted financial planner Don Nguyen, despite allegations of fraud. Speaking at the inquiry Commonwealth Bank wealth management group executive Annabel Spring said: "In this more senior position he would actually see fewer clients. He would supervise, but he would actually physically see fewer clients."

FOFA the political backdrop as ASIC probe takes centre stage | SMH | 29 Mar 2014 - Australia's corporate watchdog could see its powers over financial planners and liquidators beefed up after a Senate inquiry into its performance raised concerns about its competency, effectiveness and slowness to act. By Adele Ferguson.

Whistleblower claims the existence of 100 CBA rogue advisers | Financial Standard | 24 Mar 2014 - Former Commonwealth Financial Planning adviser and whistleblower Jeffrey Morris has "no doubt" that a proper investigation by the Australian Securities and Investments Commission (ASIC) would reveal at least 100 current or former rogue CBA advisers.

FoFA fearmongering a blow to deregulation | ABC The Drum | 18 Mar 2014 - The backlash against the Government's Future of Financial Advice amendments demonstrates just how hard deregulation really is - held back by a mire of special interests and tendency for doomsaying, writes Chris Berg.

The fisherman caught out by the low-doc loan | SMH | 13 Mar 2014 - Graham Filmer's is a story of hard luck, and one which strongly evokes the principle of 'buyer beware'. The 73 year old fisherman should never have taken out the loan, let alone the $30,000 line of credit from the bank and the Commonwealth gold credit card which went with the package.

Demystifying financial advice | CHOICE | 26 Sep 2011 - The proposed new "best interest duty" for financial advisers is long overdue.

LINKS

CHOICE: Advice on Investing | @choiceaustralia - Independent and trusted investigations and guides to the financial planning industry and your investment options. www.choice.com.au/reviews-and-tests/money/investing/advice

Future of Financial Advice - Read about the Australian Government's Future of Financial Advice (FOFA) reform package. futureofadvice.treasury.gov.au/

The Financial Ombudsman Service offers a free, fair and accessible service to consumers who are unable to resolve a dispute with a financial services provider. www.fos.org.au/

The Financial Planning Association of Australia @AustraliaFPA - The FPA is Australia's leading professional community of financial planners. fpa.asn.au/

Industry Super Australia - www.industrysuperaustralia.com/