When Leonie and Peter Crowe decided to seek advice on their financial future, they turned to the bank that they'd used since childhood - Commonwealth Bank.

And when, a few years later, their life savings were decimated, they accepted the bank's word that the global financial crisis was to blame - and not their financial planner, Rick Gillespie.

They got on with their lives.Advertisement

But last month, they received a letter from the bank that left them stunned.

It revealed that the bank had ''concerns'' with their former planner, Rick Gillespie who, it said, had been banned for life as a financial planner and was being investigated for possible forgery of signatures.

When a second letter arrived a week later, accompanied by a package of 18 documents, it dawned on them they may have been victims of forgery themselves.

''We ask that you take the time to review these documents, paying particular attention to the signatures, to ensure they are yours, prior to our discussion,'' the letter said.

After poring through the documents the Crowes identified 17 signatures that looked like theirs, but weren't.

''I was gobsmacked,'' Leonie Crowe said. ''We had been told the losses were due to the GFC and we learned to live with that,'' she said.

The Crowes are among thousands of Commonwealth customers who were advised by ''rogue'' planners and lost tens of millions of dollars after being pushed into Commonwealth products that generated high fees and commissions. After investing $1 million in 2007, within two years they had lost hundreds of thousands of dollars. They were never offered a proper explanation.

CBA is already reeling from revelations in Fairfax Media about the misconduct of financial planners like Don Nguyen, whose misconduct sparked a whistleblower complaint to the Australian Securities and Investments Commission.

The bank has paid burnt clients $52 million, been admonished in a parliamentary inquiry, provoked wrath from the corporate regulator and signed up to new conditions on its financial planning licences - extraordinary for Australia's biggest bank and one that has served generations of Australians.

However, Fairfax Media can now reveal that the extent of misconduct within CBA's financial planning divisions appears to be much more widespread than has been so far publicly revealed, extending to forgery and other misconduct against potentially hundreds of clients in its two financial planning divisions, Commonwealth Financial Planning and Financial Wisdom.

Last month, ASIC announced it had imposed new strict conditions on the bank's financial planning licences, saying that while the bank had contacted and paid some compensation to clients of two planners, including Nguyen, it had been ''inconsistent'' in how it had treated thousands more clients of other planners.

Senator Mark Bishop, the chairman of the parliamentary inquiry sparked by the scandal, has warned that the compensation the bank may need to pay out may eventually run to $250 million.

Senator Bishop points to a key February 2008 letter from ASIC to Tim Gunning, the bank's former general manager of wealth management, that has come to light in the wake of the scandal.

It sets out the results of an ASIC surveillance of Commonwealth's financial planning operations.

Commonwealth Bank's planners were rated by the bank's internal compliance team based on the quality of their advice and how likely they were to breach internal policies and the law.

Those rated ''negligible'' were deemed the lowest risk by the bank, and ''critical'' the highest - at risk of fraud and reckless failure.

However, ASIC's sweep found ''significant issues'' even with those planners rated ''negligible'' by the bank.

''Of the 38 representatives who were rated 'critical', CBA revoked the authorisation of only 12 representatives,'' the letter from ASIC to Gunning said.

It said there seemed to be a ''correlation'' between the amount of business that representatives wrote and whether or not they had been dismissed, noting that 20 planners had ''generated combined revenue of $120 million in gross sales during the six-month period''.

On Friday, the bank confirmed that nine of those ''critical'' planners remained with the bank today.

It said the planners' compliance had since been reviewed ''multiple times'', and for seven of the nine the bank had found ''no indicators of concern''.

''The remaining two advisers are currently being reviewed for matters unrelated to their 2006 'critical' rating.''

The bank told Fairfax Media that the ''critical'' ratings from 2008 ''did not necessarily mean that an adviser should be terminated or that inappropriate advice was provided'', saying a rating of ''critical'' could also relate to ''gaps in advice and compliance documentation''.

''We deeply regret that some of our planners provided poor advice in the past,'' a bank spokesperson said on Friday. ''Our first priority has been making this right for our customers.

The remediation process was overviewed by an independent expert and agreed with ASIC. Our second priority has been transforming the business to ensure these types of issues do not re-occur.''

Fairfax Media can reveal the bank sent a swat team from Sydney to Queensland on May 23 to visit former customers of Gillespie, including the Crowes, to investigate suspicions of forgery.

Fairfax Media tracked down Gillespie in Queensland, who said he was unaware of any investigation by the bank. He denied he had forged signatures, or had charged excessive fees or offered inappropriate advice. ''There is no smoking gun here,'' he said. ''It was templated models created by Colonial First State. Not by me personally.''

Several insiders have told Fairfax Media of an aggressive culture at the bank, a byproduct of a US-imported ''Cohen Brown'' sales culture adapted and implemented by the bank to increase cross-selling of products.

Planners were indoctrinated to focus on sales and fees at any cost. While ASIC has banned eight Commonwealth Bank planners, insiders maintain that bad advice was widespread.

A former employee in Western Australia says many CBA staff had nervous breakdowns because of the pressure. Another former employee says: ''It was all about the sale not about the customer and all about targets and statistics and increasing revenue.''

The details of what went on inside the bank's financial planning operations have emerged at a crucial time for the financial planning industry.

Next week, Minister for Finance Mathias Cormann will outline how far the government will wind back the previous government's Future of Financial Advice (FoFA) reforms.

The banks, which control up to 80 per cent of the country's army of financial planners, have been lobbying to dilute the FoFA reforms and reintroduce some forms of commissions. CBA's financial planning scandal is believed to have influenced some of the government's thinking.

A week later, the Senate inquiry examining the performance of ASIC - which was triggered by the Commonwealth Bank scandal - will release its findings, which are expected to include a recommendation of a big overhaul of ASIC and a recommendation to broaden the bank's compensation payouts.

For the Crowes, the scandal, the inquiry and the compensation payments were all news to them.

They had no idea that Gillespie was part of a widespread scandal, that the bank had signed an enforceable undertaking with ASIC in 2011, or that Gillespie had been banned by ASIC after the bank had dobbed him in to the regulator in June 2009.

Gillespie was one of eight planners in CBA's Commonwealth Financial Planning division that would be banned after bank insider Jeff Morris blew the whistle to ASIC in October 2008. A joint Fairfax Media and Four Corners investigation last month exposed misconduct by CBA's financial planners, including Gillespie.

For the past year CBA has tried to minimise the scandal by saying it happened in the past, it was a few bad apples, management had changed and compensation had been offered to affected victims.

But the Crowes never received a letter from the bank about Gillespie and they were never offered to seek independent legal and qualified financial advice.

''We were kept completely in the dark by the bank,'' Leonie Crowe says. ''When I think about all the discussions I had with the bank over the years, it makes me so angry. They completely covered it up.

''Virtually no service was provided by Rick Gillespie including no contact from him at all for 16 consecutive months,'' Leonie wrote in an email to her planner in June 2011.

The bank claimed to have sent the Crowes a letter offering a review of their file in 2011, which the bank said was sent to an address in Runaway Bay - where the Crowes had never lived.

In a later letter, the bank said that as no response had been received to the Runaway Bay letter, it considered the Crowes had declined a review and therefore the matter had been resolved.

But as the Crowes stated in an email to the bank: ''We have never lived in Runaway Bay and we are both at a loss as to why any correspondence would be directed there … we did not receive the letter, we did not receive an offer and decline an offer of a review, we do not consider the matter closed.''

The most the Crowes got was a refund of fees of $10,180 in July 2011.

Whistleblower Jeff Morris has looked at the Crowes' files and believes they epitomise a massive flaw in the bank's compensation scheme.

He says their complaint was ''fobbed off'' and not investigated because the bank had relied on a false ''defined scope'' Financial Needs Analysis completed by Gillespie, Morris said.

''The compensation scheme only compensates for deficiencies in risk profiling and specific investment products selected,'' he said.

A ''defined scope'' Financial Needs Analysis allows a planner to focus on a narrow aspect of a client's finances, rather than examining their financial needs as a whole.

The Crowes say Gillespie never discussed their risk profile or explained the risks involved in the assets selected.

''The CBA compensation scheme doesn't cope with issues like this,'' Morris said. ''It accepts at face value the 'defined scope' advice as recorded by the banned planner and goes from there.''

Financial Resolutions Australia, which has represented several CBA customers, agreed that the bank's compensation scheme had many weaknesses.

''We identified consistent themes of excessive use of 'defined scope' advice by 'rogue' planners without the knowledge of their clients and CBA shamelessly placing reliance on these shonky documents prepared by banned advisers like Don Nguyen to limit the amount of compensation payable,'' said FRA's Stephen Baume.

''CBA is not interested in compensating for serious advice failures beyond their simple product flogging model, despite the ferocious upfront fees charged for the overly simplistic advice. Clients dealing direct with CBA without the benefit of expert advice are at a terrible disadvantage.''

That ASIC has imposed new conditions on CBA's licences rather than a new enforceable undertaking explains why the bank has been busy contacting customers including the Crowes. On May 21 it started to revisit its Financial Wisdom division, which operated as a separate financial planning business despite being owned by the bank.

The bank placed an advertisement in The Cairns Post offering customers a $5000 payment to assist in gaining independent advice on compensation payouts.

''You may be aware of recent media attention involving some local financial planners … some former planners provided financial advice which resulted in the Commonwealth Bank Group paying compensation to affected consumers,'' the CBA ad said.

It was referring to former Financial Wisdom planner Rollo Sherriff, who was operating at the same time as Gillespie and others were riding high in Commonwealth Financial Planning.

Sherriff denies giving clients inappropriate advice.

Sherriff and Financial Wisdom were exposed in the investigation by Fairfax Media and Four Corners last month. The bank revealed it had paid out $10.5 million in compensation to clients of former planners including Sherriff.

This did not include clients of Trevor Carll, a planner in another part of the Financial Wisdom empire in Adelaide, who was sentenced to two years' prison in 2012 after pleading to one count of deception and two counts of dishonest dealings with documents. Financial Wisdom has had more than one planner jailed in the past 12 years.

Financial Wisdom client Kevin Day decided to respond to the bank's ad. He signed up with Sherriff in 1999, when aged in his late 50s, to set himself and his late wife Ellen up for retirement.

Day was advised to invest in CBA products and gear up. And by 2003 he had lost more than $390,000 of capital, had interest costs of $92,000, had lost his superannuation and had accumulated a debt of $150,000.

Day wrote to the bank on June 4, 2003, saying he was suffering ''considerable levels of stress'' due to the strategy advised by Sherriff.

''We find that our inexperience has cost us dearly,'' Day's letter said.

Day also wrote to the corporate regulator and state and federal politicians, outlining what had happened to him. ''I never got anywhere and nobody wanted to talk to me,'' he said.

Around the same time, other customers were complaining about Sherriff. Indeed, by October 2004 the Financial Planning Association had suspended his accreditation for five months after it found he gave ''inappropriate advice''.

It is believed the bank defended Sherriff and by March 2005 his suspension had been lifted and, for its star planner, it was business as usual.

Day was unaware of Sherriff's travails with the FPA and took legal action of his own, suing for more than $560,000, alleging negligence and that the advice was not suitable to Day's circumstances and objectives.

The bank fought him. He alleged unexplained transactions such as a loan advance of $100,000, the unauthorised transfer of funds into CBA products and not disclosing all relevant fees and commissions.

In June 2008, five years after complaining about Sherriff, Kevin Day settled. He had had enough. It had cost him more than $110,000 in legal fees and had consumed too much of his life.

Fast-forward to today and Day says he contacted the bank after seeing the ad in The Cairns Post about Financial Wisdom and compensation. He said he had put the ordeal behind him but decided to speak out to give others courage to fight for their rights.

For Morris, who blew the whistle on the bank in 2008, the story of the Days is all too familiar. ''It is a damning indictment of the long-term failure of oversight of the financial planning industry by the regulator, ASIC, of the moral turpitude of major dealer groups like the CBA, and the recklessness and greed of advisers like Rollo Sherriff,'' he said.

''Excessive levels of gearing for investment often seem to go hand in hand with vertically integrated, product-led financial planning dealer groups. The corporation wins both through the margin on the increased loan and from the fees on the increased investment.''

Morris has decided to help victims like Kevin Day and the Crowes secure a measure of justice under the reopened compensation scheme.

''It is time for the cover-ups to be exposed by a full judicial inquiry. The manifold failures that have occurred on ASIC's watch in this industry need to be thoroughly investigated if things are ever going to change.''

Misconduct claims widen in CBA's planning scandal

from Crikey …..

CommBank prepares desperate campaign to restore credibility

In a desperate bid to salvage its reputation in wealth management and take the pressure off the government over its gutting of the Future of Financial Advice consumer protections, the Commonwealth Bank is planning a major national campaign to address the outcome of the ASIC inquiry.

The inquiry examined the activities of financial planners working for the bank's Commonwealth Financial Planning arm, whose malfeasance, including forging signatures, cost clients tens of millions of dollars, and the feeble response of the Australian Securities and Investments Commission. The inquiry was misled by the Commonwealth Bank and ASIC about the compensation scheme currently in place, and recommended a judicial inquiry to identify all victims of the bank, and address allegations of file doctoring by the bank.

The debacle is deeply embarrassing to the government, which has set out to remove consumer protections from the FOFA financial planning reform package established by Labor in 2012. The only support for the government's gutting of FOFA has come from the big banks and financial planners. Last week, Fairfax reported that Finance Minister Mathias Cormann, who has tried to implement the gutting of FOFA via regulation, met with CEO Ian Narev to discuss handling the crisis. The Commonwealth has compounded the problem by trying to downplay the scandal, and Narev has avoided playing any role in addressing it.

That is set to change: Crikey understands the Commonwealth is today shooting a video message from Narev finally addressing the scandal. The bank will also roll out full-page ads in Friday's newspapers. The bank, insiders say, will also run a national campaign targeting people affected by CFP planners' misbehaviour urging them to contact the bank for remediation.

Critically, that will also include people harmed by CFP who have previously settled with the bank. The remediation process will be overseen by an independent panel, with advice made available for victims.

Anything less than a grovelling apology from Narev and an independent, generous restitution process risks, as Americans say, looking a day late and a dollar short -- not merely for the bank's reputation in financial planning circles (given the bank's misleading of the committee, and ASIC's gross ineptitude, who would currently trust a planner linked to the Commonwealth?) but for the government's efforts to gut FOFA. They look likely to die in the Senate as soon as Cormann tables the regulations when the new Senate meets next week, with the Palmer United Party, the Greens and Labor all committed to disallowing them.

Moreover, as the industry has examined in detail the Cormann regulations, experts on all sides have begun spotting major loopholes. More on that soon.