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Economics References Committee
Performance of the Australian Securities and Investments Commission

BRAUND, Mrs Janice, Private capacity

SWAN, Mrs Merilyn, Private capacity

Committee met at 08:46

CHAIR ( Senator Mark Bishop ): The committee will come to order. I will not read out the four-page opener that I normally do, but I do want to draw your attention, and the attention of those who are interested, to some matters that are pertinent. The committee intends to use today's hearing to, among other things, consider the Commonwealth financial planning matter in depth. If, in the course of doing so, individuals and organisations involved in that matter are named and are subject to adverse reflection in oral evidence, the committee, through the secretariat, will endeavour to alert them to the evidence in question and will provide them with an opportunity to reply. However, in some cases it may be difficult to contact named individuals and organisations directly. As such the committee invites individuals and organisations who believe they have been the subject of adverse reflection at today's hearing to contact the committee again, through the secretariat, and request an opportunity to reply.

I welcome Mrs Jan Braund and Mrs Merilyn Swan. Would either of the witnesses like to make a brief opening statement?

Mrs Swan : Yes, I would like to make a brief opening statement. Good morning. In the Fairfax media on 20 June 2013 CBA's wealth management executive Annabel Spring wrote that a small group of advisers provided poor advice to some customers and that the CBA had no tolerance for behaviour that prejudiced the financial wellbeing of customers. She claimed that honesty and transparency have underpinned discussions with the regulator and with customers. Nothing could be further from the truth. In fact CBA has a contemptuous disregard for the financial wellbeing of their customers.

My detailed submission to this inquiry exposed the role of CBA and ASIC in reducing my parents' investment of $260,000 to only $92,000 within 22 months. I am here today because CBA's financial planner, Don Nguyen, and CBA's senior management engaged in systematic fraud, forgery, and deceptive and misleading conduct, to retrospectively cover up Nguyen's activities, to specifically refute my parents' claims and to minimise CBA's financial liability. ASIC was a complicit partner in CBA's activities and was incompetent and impotent when it came to dealing with this large, influential, financial organisation.

In response to my parents' complaint, CBA management categorically denied that there were any problems with the quality of Nguyen's advice. They then reported that they had lost my mother's file and then sent my parents copies of fraudulently altered and falsified documents that CBA management had manufactured to convince my parents that they were responsible for choosing high-risk investments. These documents include a fraudulent statement of advice and a second financial needs analysis, complete with forged signature, fraudulent changes to my mother's contract made after it was signed on 10 May 2007, and a falsified table purported to be extracted from the original statement of advice of 3 March 2007. CBA never responded to my FOS submission and when CBA entered into an EU, they never contacted my parents to advise that their settlement could be reviewed. When challenged, CBA's Customer Relations General Manager, Dr Brendan French, claimed their settlement had been reviewed and was appropriate—no discussion, no explanation. In April 2013, he wrote, 'Neither CBA nor CFPL will respond to further letters covering the issues.' The so-called independent review was based on CBA's own fraudulent documentation in my mother's file, despite Annabel Spring's claims any perception CBA's compensation process and discussions with their customers have been honest and transparent are farcical.

ASIC was a complicit partner in CBA's activities. ASIC determined in 2008 that the quality of advice and standards of practice at CBA were unacceptable, but chose not to warn investors they were at risk. They surveyed 50 financial advisers, not one or seven. ASIC imposed a CICP on CBA in April 2008, but then allowed the CBA to supervise its own program. When the whistleblowers informed ASIC in October 2008 of serious criminal activities within CBA, ASIC failed to seize the files, install external compliance officers or interview CBA staff. CBA was actually operating under a CICP at this time. It took another 16 months before ASIC finally seized what was left of the files. ASIC accepted CBA's claim 423 of Nguyen's client files simply vanished into thin air and negligently accepted CBA's 182 sanitised reconstructed files as authentic without actually any verification from the clients involved. ASIC completely failed to oversee CBA's compensation process, leaving CBA to cover up the extent of their clients' losses and its fraudulent activities, and to minimise its financial liability and compensation payment.

ASIC has failed to refer evidence of fraud and criminal activities by Nguyen and CBA's management to the Director of Public Prosecutions, the ACCC or the Administrative Appeals Tribunal. ASIC has failed to determine the financial losses suffered by CBA clients and therefore has no idea if the limited compensation paid is adequate. Despite having no idea of the extent of these financial losses, misleading statements by Mr Medcraft and Mr Kell have encouraged a false public perception CBA victims have been adequately compensated and that CBA operates in a transparent, accountable and honest manner. If Mr Medcraft, Mr Kell and the ASIC commissioners believe that ASIC's actions in this CBA saga have in any way inspired investor confidence in the financial sector and in ASIC as a corporate regulator then they are not listening to the CBA victims. If this is the best ASIC can do then God help Australian investors because ASIC certainly will not.

CBA and ASIC took my parents financial security, their dignity, their self-confidence, their physical and mental wellbeing and, finally, their privacy. Please, Senators, make them accountable and make very certain this never happens again.

CHAIR: Thank you. Mrs Braund.

Mrs Braund : Good morning. Thank you for the opportunity to speak at your Senate inquiry on ASIC. My details have been lodged with the submission and I will elaborate with answers. The answers will show the gross incompetence of ASIC and the hostile covering up, and the unlawful actions of CBA. My husband and I chose CBA because Alan had banked with them since 1950, and it was the big symbol of integrity and you felt as though there was competence there. It is awful to have to say but it was a big mistake. When we went along in 2002, we told the bank that we were conservative and that we would always live off our capital. This was tremendously important to us. I had been alerted along the line of Depressions and things like that, so it was extremely important. Alan at this stage was not deeply into dementia but was certainly going into dementia. As time went on, of course he fell further into dementia. He always looked after the finances and there I was not a financial person at all.

My difficulty began really in February 2007 and ASIC said that they knew about the financial problems with CBA at that stage.

My major problem started at the end of the year of 2007, when there were all sorts of things. I had said to Don Nguyen to safeguard the money. I was in New Zealand at the time. I took Alan out of New Zealand. I took him there originally to die, because I knew he was dying of dementia. So I bundled him up, put him on a plane, brought him across. I told Don Nguyen to safeguard the money, to put it into cash. I suppose this is ridiculous, but I did not know I had to sign off on that, and he never ever told me that I had a way of doing it myself. He said he would do it but when I came back through Australia, going to England in March, I found that it had not happened. The crash had happened and I was losing money incredibly.

Now, ASIC knew that Don Nguyen had photocopied my signature. Although they knew that, when they finally took Don to the tribunal they failed to tell them that. So that was a criminal thing, and in a fax I had sent across to the security of the Commonwealth Bank, they had said that this was not happening, but they could have gone to the Federal Police. Mrs Perkovic from the customer section of the Commonwealth Bank said in February 2012, 'We note your concern regarding fraudulent use of your signature.' But they never ever did anything about it. Not to this day has there been a report.

At that AAT hearing ASIC did not tell the group there that Don Nguyen had an income protection benefit. He got this benefit because CBA allowed him not to resign, and he came back on sick leave. So he has been receiving a benefit that all of the people he defrauded have not. We have been absolutely behind the eight ball and he has been receiving that benefit. I think that should stop.

The other thing is that John Williams received some information from ASIC recently that I gave Don permission to use my signature. That is absolutely ridiculous, and I have a statutory declaration here to prove that I had not. At no time did I give him any permission.

CHAIR: Mrs Braund, do you want to table that statutory declaration?

Mrs Braund : Certainly. Thank you. I would like the ASIC people to produce some information of where they got that, because it seems to me that all through this process, either with the CBA or ASIC, incompetence is coming through and the mighty rumour has being set up out there.

CBA had also set up some sort of surveillance at some stage. That was brought out in the papers last year. I did not like that idea. I did not like the feeling that perhaps my privacy was being invaded. Now, to say that this is a shattering experience is just beyond anything. CBA has never answered any of my questions. I would like a royal commission, if we could possibly have one, into this. CBA cannot get away with it. We have got to change ASIC so that they come up to a better standard.

In summary, I feel as though I have done ten rounds with Muhammad Ali and got nothing in the end. I would like that extra payout, that compensation. I would like people found that have not been found by CBA. People's lives have been shattered. I have been scorned. I have been told—I am paraphrasing—'What would a little old lady know about the coming concern of the global financial crash?' I looked at TV in New Zealand and I could see that there was a big problem coming. That is why I tried to change everything.

CBA has bullied me and they gave me this incredible feeling that, while I was dealing with Alan's dying, I am still had to try to deal with them. So in conclusion we just cannot let ASIC get away with it, or CBA. Thank you very much.

CHAIR: Thank you Mrs Braund. Mrs Braund and Ms Swan, I have a set of questions for both of you, and then I will hand over to my colleague Senator Williams at the conclusion. And Senator Whish-Wilson you are listening on the phone?

Senator WHISH-WILSON: I am indeed chair.

CHAIR: Okay. Thank you, Senator Whish-Wilson. Senator Whish-Wilson is a Greens Senator from Tasmania and he has dialled in. And you have some questions in due course?

Senator WHISH-WILSON: In due course, chair; not right now.

CHAIR: Mrs Swan, could you summarise for the committee the areas where you think ASIC has failed the particular matters in relation to the CFP matter and in relation to your parents specifically, and which of these failures is of most concern to you? What are the failures? What is the priority in terms of affect against your family and the priority in which you seek redress if possible?

Mrs Swan : As I said in my opening statement, I see that ASIC has actually been a very complicit partner with CBA in that they have failed to exercise their legislative powers. I believe they have the powers but they consistently say that they do not want to have the cost or spend the resources chasing these things up. I am not sure what they are actually spending their resources on. They failed to tell investors, in their survey of 50 financial advisers over 2007-08, that they had found that they were providing a quality of advice and a standard of practice unacceptable. In fact the Commonwealth Bank went on to be found to be acting unlawfully outside the regulatory guidelines. Mr Kell has made a statement previously that they act in the interest of the public when required. If that is not requiring ASIC to act in the interests of the investors, I do not know what is. The investors should be aware of the circumstances under which these financial institutions are operating. The mantra of ASIC is that the investors, when they invest through ASIC's governance, can invest with confidence and security. That is not the case whatsoever.

I am appalled that the perpetrator, CBA, was actually put in charge by ASIC of all the remedial action. They got to supervise their own CICP. They have already been found to not be reporting breaches. They are in serious breach of the regulatory guidelines. Then ASIC puts them in charge of self-reporting. This is really the fox in charge of the hen house. When the whistleblowers reported, repeatedly, to ASIC that these serious breaches were occurring in October 2008, CBA was already under a CICP, yet ASIC failed to move for 16 months. This gave CBA plenty of time to cover up Nguyen's activities. Instead of saying, 'Yes, we've been caught, we own up, we'll compensate you, we'll rewind this problem and we'll apologise,' there was a deliberate decision made by senior management at CBA, right at the top, to cover this up. The fact that at that point ASIC did not put external compliance officers in and seize the files is just reprehensible, absolutely reprehensible.

CHAIR: You assert that ASIC have the powers and do not want to use the resources.

Mrs Swan : Yes.

CHAIR: You assert that in relation to the survey of 50 financial advisers the response was inadequate. You assert that there has been grossly insufficient regard for the protection of investors.

Mrs Swan : Yes.

CHAIR: You allege that, when CBA was put in charge of the remediation, including self-reporting, it was patently a bad action on their part.

Mrs Swan : Yes.

CHAIR: You refer to no protections, no exclusions. Anything else?

Mrs Swan : Yes. They also allowed CBA to actually oversee the compensation process. They have allowed CBA to appoint its own independent reviewer. I believe it is an accounting firm and not a firm of financial planners. That has certainly allowed CBA to cover up the extent of any losses and their fraudulent activity. It has also significantly minimised their financial liability and therefore the compensation.

CHAIR: You say that the independent reviewer, as determined by CBA, was inadequate and it should have been an independent reviewer with full access determined by, what, ASIC?

Mrs Swan : ASIC. CBA should not have been allowed to appoint their own choice of independent reviewer.

CHAIR: I agree with that.

Mrs Swan : The other thing is that ASIC has actually failed to report any evidence of the fraud and criminal activities that we have brought to their attention. Mr Adrian Borchok at ASIC has been sent copies of all of my fraudulent documentation and dismissed it as part of a conspiracy theory against the CBA. I am offended at that approach from ASIC. I feel that, as a corporate regulator, they have very much failed the 1,300 investors who are associated with Mr Nguyen. Only 201 have actually been compensated.

CHAIR: Mrs Swan, you have joint complaint. Firstly, the activities that occurred through Commonwealth Financial Planning and, by implication—

Mrs Swan : Senior management?

CHAIR: the parent bank. That is one of your points of attack. The other is your allegation that ASIC was simply inadequate or incompetent or—

Mrs Swan : Impotent.

CHAIR: in carrying out the job that you as a citizen thought it should be doing. In terms of allocation of responsibility, do you assert 50-50 or more on one side than the other? Or are they different things and you do not care to assert a break-up?

Mrs Swan : I do not know that you could actually apportion 50-50 or 70-30. We would not be here if the CBA did not involve itself in criminal activity. That is the root of the problem. The CBA has not been honest, transparent or accountable. If they had been, we would not be here. That is the root of the problem. There seems to be an incredibly cosy relationship between the CBA, ASIC and the financial institutions. ASIC has just depended on the large financial institutions saying, 'Everything is okay; you do not have to worry.' I have documentation here that I would like to submit to the Senate—four documents that were fortunately produced and sent to me by CBA management to cover up what had actually happened to my parents.

Senator WILLIAMS: How do you know they were fraudulently produced?

Mrs Swan : Because, unlike most of the clients of Mr Nguyen, my parents walked off with an original copy of their statement of advice.

Senator WILLIAMS: I see.

Mrs Swan : So, when they send me documentation and claim it is a copy of the statement of advice or extracted from the statement of advice or part of the contract in the statement of advice, I fraudulently have an original, so I can prove categorically that the documentation they sent me was fraudulent.

CHAIR: Do you wish to table those documents?

Mrs Swan : Yes, I do.

CHAIR: We will accept the tabling of those documents, subject to the rules of the Senate, which I know you are familiar with because we have redacted certain things from time to time. So, subject to those normal rules, we will accept those.

Mrs Swan : I attached a full copy of all of these documents to my submission as appendices.

CHAIR: So we have already received them?

Mrs Swan : Yes. These are just summarised copies. The other thing is that Mr Nguyen or someone at the CBA manufactured a completely fraudulent financial needs analysis on 3 November 2008. They claimed that my mother is happy with her income from this allocated pension and she wants to increase the aggressiveness of her investment. My mother, at this stage, was actually at CBA complaining because her investment was now worth 50 per cent of her original investment. It was now worth $123,000 of the $260,000. She never received a cent of income from any of these products and they never attended to complete this FNA.

CHAIR: Thank you, Mrs Swan. In your submission you refer to CBA's process of compensating clients of CFP, Commonwealth Financial Planning. You say:

… correspondence to the victims is written as if ASIC has endorsed, and hence is actively supervising, the compensation program. Nothing could be further from the truth.

Could you clarify for us: are you referring to correspondence from ASIC regarding the compensation program or are you referring to correspondence from CBA/CFP?

Mrs Swan : CBA/CFP have sent documentation, particularly from Dr Brendan French, that the compensation process is part of ASIC's program and supervision. That has simply not been the case. I have not been able to apply to ASIC to have my parents' compensation reviewed. As far as they are concerned, it is a CBA process.

CHAIR: Is the correspondence from ASIC or from—

Mrs Swan : CBA.


Mrs Swan : Yes.

CHAIR: That is the correspondence you are referring to. Can you clarify for us how the impression is created in the correspondence and why you regard it as misleading.

Mrs Swan : I think CBA is trying to give the impression to the investors that ASIC are viewed by us ordinary investors as perhaps a regulatory body that exercises some influence over CBA et cetera and that they are actually actively involved in this compensation process, but they are not. It gives the impression that ASIC is overseeing the process, but they are not.

CHAIR: No, they are not. It was a negotiation done within the CBA.

Mrs Swan : Yes. It was a negotiation done within the CBA but with ASIC, and then ASIC walked away and left the CBA to negotiate. What CBA have done is isolate individual clients and then pick and choose who they will inform that they will compensate and how much they will compensate them.

CHAIR: Can you outline your concerns regarding the lack of transparency in the CFP compensation process and in particular your suggestion on page 23 that the process has left the CFP victims' operating in an information vacuum and in the dark. What are your particular complaints about the lack of transparency in the CFP compensation process?

Mrs Swan : In my own process, I eventually dragged CBA to the negotiation table on 8 June 2010, before it was released that ASIC had seized files and also before ASIC had actually imposed an EU or implemented their compensation process. I supplied Iona Williams and Nathan Stanton, who are from the CBA, with all of the documentation that I had been sent that was fraudulent. I pointed out that their FNA process was misleading and that it directed people directly into more aggressive portfolios. Even though ASIC had taken their files by that time, both of them sat there and denied there was any problem with CBA's advice or with Mr Nguyen. They vehemently denied it. We had a meeting that went for about an hour and a half. We left all of our evidence there and said that our next step was the ACCC, the media and the police. Two days later my parents received a letter offering them $95,000 to settle. When ASIC became involved, they directed CBA to contact all of the affected clients and advise them that they could have their compensation reviewed. That has not happened. My parents have never received a letter reopening that. When I eventually engaged Financial Resolutions Australia on my behalf to contact them to renegotiate or reopen and review our compensation, we merely received this letter from Mr Brendan French in 2013 to say, 'It had been reviewed, it was appropriate, and we will not be discussing this anymore.'

CHAIR: And Mr French is?

Mrs Swan : He is the General Manager of Customer Relations—so the head of the complaints department.

CHAIR: For who?

Mrs Swan : CBA.

CHAIR: Are you saying to us that when you tried to avail yourself of the $5,000 that the Commonwealth Financial Planning organisation offered to former clients of Mr Nguyen to help pay for an accountant, a lawyer and/or an independent licensed financial adviser in order to assess its compensation officer, you were advised by an officer of the bank, Mr French, that that offer could not be availed?

Mrs Swan : Yes, exactly. They refused to pay FRA, whom I have chosen to represent me, that money to do this investigation. Furthermore, the Commonwealth Bank are picking and choosing which companies they will deal with. This is not an open process. They are picking and choosing which accountants and which lawyers you can employ.

CHAIR: So you complained that the set of independent financial advisers that was offered to aggrieved clients was so limited that aggrieved clients, yourself in particular on behalf of your parents, could not choose their own independent financial adviser.

Mrs Swan : I am saying that, if you choose someone to represent you, CBA chooses whether or not to make that $5,000 available. I have not been informed by Dr Brendan French who has reviewed my compensation case or on what basis it was reviewed because it was reviewed on the CBA client file. The CBA client file is full of fraudulent documentation. So if an accounting firm such as PricewaterhouseCoopers is reviewing the files, they are reviewing fraudulent documentation which does not reflect the true situation. That process is not open to any scrutiny by the clients. We have not been invited in to have it explained. I do not know how the calculation is done. It is certainly not an open process and the claim Ms Annabel Spring and the claim by CBA that we have had access to $5,000 to cover any costs to get an independent person to do this is completely false.

CHAIR: So you say that the offer of independent financial advice was essentially an offer with serious strings attached.

Mrs Swan : Absolutely, serious strings attached including CBA has to approve who you are employing.

CHAIR: Thank you, Mrs Swan. Mrs Braund, you recall in your submission that Mr Morris provided a copy of your CFP client file to you as a safeguard against the risk of your file otherwise disappearing from the CBA records and you repeated that today in your opening remarks.

Mrs Braund : Yes, I did.

CHAIR: You further report that you later received a copy of your file from the CBA but certain documents included in the client file provided by Mr Morris were missing from the CBA client file, so there was a difference there. What documents were missing from the CBA supplied version of your client file?

Mrs Braund : It was the original one where I set up with Don Nguyen on the first day in 2002 that I was conservative and that I would always only use proceeds from capital and that was missing. Because all the way through the documents it would seem to be that I was in a high-risk situation.

CHAIR: So effectively the key document which you would provide to a lawyer or in this case to a financial adviser, your instructions as to how he was to govern your financial affairs, was absent?

Mrs Braund : Exactly, and I have this particular piece of paper here, which I would like to table.

CHAIR: You can table that subject to the customary orders, Mrs Braund. Is that the only document or is it the most significant document?

Mrs Braund : That is the most significant document.

CHAIR: In what way would that missing document have been relevant to your compensation claim?

Mrs Braund : It is very difficult to know because all the way through my first compensation from the bank was $200,000. I had invested a million dollars and I paid the extra of $10,000 to set up the whole program. Eventually when we were starting to get closer to compensation they only provided $200,000. Then after we said that that was not good enough, they came back with all sorts of bits and pieces to prove that it was good enough.

CHAIR: At the end of the process, how much were you net out of pocket?

Mrs Braund : It would have been around $800,000.

Senator WILLIAMS: Out of pocket?

Mrs Braund : You are talking about overall. There are two episodes here. One was where I tried to get hold of Don Nguyen to give me protection—

CHAIR: You started with a million dollars to invest?

Mrs Braund : Yes and I finally got up to 1.2 million, almost 2½, then that money started to disappear—

Senator WILLIAMS: Are you saying your wash up was 1.2 million?

Mrs Braund : Yes. So the money reduced right down to about half a million.

CHAIR: You had a million to invest. Did returns take it up to 1.2 million?

Mrs Braund : That is correct.

CHAIR: Then there was a decline in value?

Mrs Braund : Yes.

CHAIR: And it declined to what figure?

Mrs Braund : To about half a million but in that period of time of the half a million Don Nguyen phoned me from New Zealand and said that the money was going down too rapidly, to get out of the marketplace and put it into cash. At that stage I was in New Zealand and I said, 'How do I do it?' He told me to fax it and to follow it up with a phone call, which I did. I was still under the impression that I had moved from the marketplace into cash. Now I find out I have not because Don Nguyen went over and countered my instructions and then I lost money again. There were two lots of compensation. One I was paid during that period of time and the other one was for the overall—

CHAIR: I have got that now. Cut to the end, and you have finally signed the document of settlement.

Mrs Braund : Yes.

CHAIR: And you have got the compensation cheque.

Mrs Braund : Yes.

CHAIR: What was the total that you received in recompense?

Mrs Braund : $880,000.

CHAIR: Okay, so you assert that the loss that you suffered is somewhere between the 880 and 1.2 million?

Mrs Braund : That is correct.

CHAIR: Subject to the caveat that originally one million was invested.

Mrs Braund : The only other overriding thing that I have asked—CBA has never answered any of my questions. Never in any pieces of paper was there evidence that they had looked for fraudulent signatures and that was the main thing that I was worried about. He had photocopied my signature, I had sent that evidence in fax from New Zealand to the security of CBA and CBA did not answer me back in writing or anything. Then I phoned them about a fortnight later and said, 'Well what was the result?' They said that Don Nguyen came into the meeting and they presented him with the facts and that evidence. He went two shades of pale and then they allowed him to walk out of there, not sack him on the spot. From what I can gather he also robbed the bank of all sorts of things before that and they had promoted him. It is a ridiculous situation where we have somebody who is a crook, his bosses know that he is a crook, allegedly a crook—I will give you that.

CHAIR: Mrs Braund, I noted that when I was reading the voluminous documents on the plane yesterday. Between the September and October, Mr Nguyen got a promotion. We will explore that later with—

Mrs Braund : Oh, how wonderful.

CHAIR: We have limited time here and I want to cut to your issues. Now, you point out in your submission—

Mrs Swan : Can I clarify one thing I may not have made clear to this Senate inquiry, that in my parents' case and probably in the case of the people who did settle before ASIC forced them to settle, the CBA never offered the people who had settled the opportunity to review their settlement. When they actually tried to get a review, to force a review, Dr Brendan French replied that the review had been undertaken and was satisfactory. That was our only reply from CBA.

CHAIR: I presume from what you are saying here is that once the settlement was signed by the client with CBA they then regard that as closed, sealed and moved on.

Mrs Swan : That is right, even though those settlement deeds have no legal binding after the ASIC finding.

CHAIR: No I understand that, thanks Mrs. Swan. Mrs. Braund, you pointed out in your submission that you never disclosed to ASIC what documents were missing from your CBA supplied client file. If you did then and now believe those particular documents were so significant, why did you not disclose that fact to ASIC?

Mrs Braund : I suppose there is lack of faith in the system. I had been invited in to look at some documents to see if my signature was fraudulent or not. I did go in there and I had an absolutely catastrophe on the way home. Alan fell down between the train and the other—

CHAIR: Your husband on the train.

Mrs Braund : You know about that. Having gone in there and made the considerable effort, they phoned me in about a fortnight and said that they did not need that evidence, that they had enough evidence of their own and they were not going to use it. So at that stage it was silly to sort of think that I could have faith in a system that was not working. Also Mr Borchok ,in a meeting, did not accept FRA. He turned his back on FRA, even though FRA had said to him that there was money Don Nguyen was receiving because he had not resigned. Mr Borchok then turned his back and he said to me, 'I have to speak to you because you are a taxpayer.' Now how ridiculous is that? He just did not give me any answers anywhere along the line.

CHAIR: Mrs Braund, can you tell the committee how important it was to your case and your ability to continue with this matter all these years was Mr. Morris's decision to provide you with a copy of your complete client file?

Mrs Braund : I guess what I have to say to you is that I would not allow them to get away with it. I was tense: I was trying to keep Alan going; I had to move him from New Zealand back to Australia. That was a tremendous strain. As it was I fell into the arms almost of Jeff Morris—he was the whistleblower; I would not have believed this—and I was just so pleased. From then on I had confidence in Jeff. After a little while my own solicitor had said to go to Maurice Blackburn. I did not like that set up, and then Jeff said to me that he had a chap that he knew and that was Financial Resolutions Australia. And from then on in—you can understand I am not a detail person, I am not a financial person. When I listen to my colleague here, she is unbelievable. She can say all sorts of things; I cannot. But I was just so thrilled to have this situation.

CHAIR: So it was critical?

Mrs Braund : Critical. Absolutely critical.

Senator WILLIAMS: Mrs Braund, is it true that your signature was placed on a document while you were actually in Madrid?

Mrs Braund : It was, and it is, yes. It was from the photocopy that Don had taken in the office one day. He said that he had some clients that were coming right in on top of what was happening, and could I sign this blank piece of paper. When I went to on—

Senator WILLIAMS: That is fine, we got the answer. Is it true that your signature was placed on a document on that day you were in Fiji?

Mrs Braund : Yes.

Senator WILLIAMS: Did you ever have discussions with Don Nguyen that he could change moneys, transfer moneys through your accounts just by you doing a telephone call to him and authorising him to do that? Did you have any discussions like that?

Mrs Braund : My impression was that was the way that it happened, that you just rang him and he did it. I did not know you had to do all of this other stuff. He did not tell me that I had to put a fax in.

Senator WILLIAMS: So you rang him at times to transfer moneys, and he did it?

Mrs Braund : I did. I did from New Zealand, yes.

Senator WILLIAMS: And he had your signature on those transfer documents?

Mrs Braund : He had a signature. If you notice, on all of the documents it was the same signature that was on the piece of paper that I signed. He had pasted it on to every one of them.

Senator WILLIAMS: Did you ever give him permission to use that signature?

Mrs Braund : I did not.

Senator WILLIAMS: You did not?

Mrs Braund : I did not, and I have already tabled a document to say I did not.

CHAIR: How many instances were there of your signature falsely being attached to those documents?

Mrs Braund : It could be over a dozen. I do have some papers here that I could present to the committee that have all of those pieces on it. I do not know whether it has already gone in. Do you have something there that I can give you?

CHAIR: Do we have those already?

Mrs Braund : It has my passport and it has all the signatures.

CHAIR: Table them, Mrs Braund, subject to the usual rules.

Mrs Braund : I think it would be worthwhile, yes.

CHAIR: But you assert that your signature was falsely attached on at least a dozen occasions.

Mrs Braund : I do.

Senator WILLIAMS: Mrs Braund, did you ever seek evidence or investigation results from Ms Perkovic from the Commonwealth Bank?

Mrs Braund : I have not pursued it in terms of getting—

Senator WILLIAMS: Did you ever request anything?

Mrs Braund : No, I have not. I did in the beginning. I have always requested that particular thing: who signed my slip, particularly when I was exchanging from market into cash. Who did it? And they said nobody in particular did it.

Senator WILLIAMS: Did you ever get a written response?

Mrs Braund : My written response? I have it here. This is what was said:

We note your concern regarding the fraudulent use of your signature. We regard that allegation very seriously. However, regardless of the outcome of any investigation—

So she was saying that they were very, very sorry and that they were going to do something about it, but they never did. I never got any confirmation from them.

Senator WILLIAMS: Mrs Swan, you said in your opening statement that there was fraud and forgery.

Mrs Swan : Yes.

Senator WILLIAMS: Are you saying that you had the original contracts of your parents at home?

Mrs Swan : Yes.

Senator WILLIAMS: You asked for a copy of the complete file from CFP?

Mrs Swan : Yes.

Senator WILLIAMS: And when you got that complete file, there were papers that had been manufactured and placed in that the file?

Mrs Swan : Over the space of six months I received four documents. The first one was a letter from a Mr Andrew Hancock dated 21 October. This was a letter of denial that there was any problem with the portfolio. On the third page of that document there is a table purportedly extracted from pages 26 and 27 of the original statement dated 3 March 2007. This is actually a statement of the summary of assets. It clearly states the assets in which the portfolio was in. The fourth column has been cut and pasted onto this table. On page 32 in the original statement of advice, which I have, this fourth column's label is 'Percentage variance'. On the copy in the letter, that column has been cut and pasted out and a column labelled 'Income versus growth' has been inserted into the table.

Senator WILLIAMS: Who did that?

Mrs Swan : Mr Andrew Hancock. He admitted this on 19 March, during a phone conversation. He said he had done this to simplify things for less educated investors, which my parents were not. They had managed their own investments—

Senator WILLIAMS: Hang on a minute. You are saying that he explained to you why he fabricated another section of your SOA?

Mrs Swan : He fabricated a table he purported came from the original SOA in this letter. The impression that this table gives is that my parents were actually fully informed of the distribution of their investments. And it gives the impression, when you initially look at it, that 50 per cent are in growth and 50 per cent are in income. In actual fact that was not the case at all.

Senator WILLIAMS: Okay, we are running very short of time. David Turner, chairman of the Commonwealth Bank, said at their AGM in Adelaide, last year I think it was, that what CFP did was shocking, it was wrong et cetera. Were you suitably compensated?

Mrs Swan : No. We have not even received an apology. They completely fraudulently manufactured a statement of advice they sent to me as being a copy of the original. It was actually manufactured on 7 September 2009, two years after Mr Nguyen had left. It has extra pages inserted into it. It has this table inserted into it that was not in the original. And it clearly shows that although the portfolio says 40 per cent of these products are income producing, this table clearly shows that none of them were. They also sent me a copy of the contract that had been supposedly signed by my parents. There are handwritten changes to this contract. They are not notarised.

CHAIR: Mrs Swan, I do have to interrupt you. We have limited time, and Senator Williams has a few other points he wants to get out. So if you want to table those documents, if they are of value, we are happy to accept them subject to normal rules.

Mrs Swan : I am not satisfied with Mr Turner's statement. I think the Commonwealth Bank has been involved in illegal criminal activities and I think these should be referred to some criminal prosecution.

Senator WILLIAMS: Finally, Chair, as we are running very short of time: this whole wash-up of what went wrong—did you say Mr Nguyen had 1,400 clients?

Mrs Swan : Thirteen hundred clients, yes.

Senator WILLIAMS: Were either of you ever asked to sign documents with Don Nguyen outside the bank premises?

Mrs Braund : Yes, that is absolutely right.

Senator WILLIAMS: Just explain to the committee what that was about, please.

Mrs Braund : I had been in touch with Don after he had switched all the money and after I had returned to Australia. I had arranged a meeting with him at the Commonwealth Bank, in Victoria Avenue, Chatswood. So I went there and could not find him, and all of a sudden someone called Michelle was looking for me. She wanted me to sign a piece of paper and I would not do it. I said, 'Where is Don?' She said, 'Not here'. After about 10 minutes of waiting and her insisting I sign this document, which I would not do, she said, 'He's down in Victor Street in Chatswood, and he's waiting for you down there'. That was a bit strange. So Michelle took me down there, and when I arrived he was not there. After 10 more minutes he arrived with his daughter and his wife. We had some lunch and then I said, 'Let's go back to the Commonwealth Bank', and he said, 'No, let's go into Myer at Westfield and we'll talk business there'. That was the last I saw him. He wanted me to sign a document, and I said absolutely not.

Senator WILLIAMS: Did you sign it?

Mrs Braund : I did not, no. Then he walked away, and that was the last I ever saw of him.

Senator WHISH-WILSON: I note that Mrs Swan mentioned the dates that her parents' investments were reduced from $260,000 to $92,000. I was just wondering whether Mrs Braund could outline the dates that her $1.2 million fell to half a million.

Mrs Braund : In 2002 I contacted the Commonwealth Bank. By 2007 it was around the $1.2 million mark, and then from $1.2 million it went down to the $500,000—that would have been around March or April the next year, 2009.

Senator WHISH-WILSON: It interests me, in terms of what we are looking at here today, that both of those investment amounts obviously fell during the peak of the GFC.

Mrs Braund : Yes, that is correct, because the investment was in the market.

Senator WHISH-WILSON: That would not have been atypical; it would have reflected most people's investment balances—

Mrs Swan : No, Senator. I would like to respond to that. My parents were actually invested in a moderate-risk portfolio when in actual fact they were conservative investors. Their portfolio lost 67 per cent of its value, and that was far in excess of any moderate investments that I had and in fact far in excess of similar moderate—

Senator WHISH-WILSON: I am not going to dispute that. I am just trying to put this into context. There are two issues here. There is the potential for inappropriate advice, or conflicted remuneration issues, in the first place. And then there is of course cover-up. I am trying to separate the two out at the moment.

Mrs Swan : I understand that. And the letter that I received from Miss Adorini on 23 July confirmed that in actual fact these investments were not in a moderate portfolio. They were actually all high-risk investments and therefore far more volatile and far more affected by the GFC than if they had been placed in the appropriate investment products.

Senator WHISH-WILSON: So, that became very clear for you during the compensation process.

Mrs Swan : It only became clear to me when I received a letter from Miss Adorini. Up until that stage and even beyond that stage the CBA continued to actually say they were in a moderate-risk investment portfolio. That was not correct. All of the products were actually high risk.

Senator WHISH-WILSON: Mrs Braund, were you aware of the actual products that you had received or had your money allocated to prior to the collapse in 2007?

Mrs Braund : I am not a financial person. I am so sorry to have to say that. Although things are presented to me, I do not understand these things.

Senator WHISH-WILSON: I am very glad you said that, too, because this is an issue we face right across this industry. What is poor-quality advice? Often people do not understand the advice that they are getting in the first place. For example, did you know whether you had any money in cash, or any of your investments in cash, at the time?

Mrs Braund : In 2007?

Senator WHISH-WILSON: In 2007, yes.

Mrs Braund : There would have been a very small amount, I think. But all I could see was that I was in the marketplace and it was going to crash. That is when I wanted to put it all into cash.

Senator WHISH-WILSON: When you were in New Zealand, was that in 2008, or 2009?

Mrs Braund : I moved there in 2006. I took Alan there because of his wanting to be there to die. I came back either at the end of 2008 or in 2009—I think it was 2009.

Senator WHISH-WILSON: And would that be when you wanted to put it into cash?

Mrs Braund : No, I wanted to put it into cash in 2008. I have a timeline here that I would like to present and have tabled. It is on everything that has happened to me and all the time lines with Don Nguyen and all the meetings and things like that.

CHAIR: We will accept that.

Mrs Braund : And I have all the signatures—I have it all here for you now.

CHAIR: We will accept all those documents, subject to the normal restrictions.

Senator WHISH-WILSON: It was mentioned that there were interactions with ASIC staff. Could I just clarify, for both the witnesses, were they by telephone, or were they face-to-face meetings, or a combination of both?

CHAIR: Senator Whish-Wilson, you are raising that there was some interaction with staff. Staff of whom?

Senator WHISH-WILSON: Sorry. In the submission there was mention of ASIC staff. I will ask the question in a different way. In, I think, Mrs Swan's submission, she was disgruntled about the interaction with ASIC staff. I am just wondering what those interactions were? Were they by telephone or did she actually meet with ASIC staff face to face to discuss these issues?

Mrs Swan : I did not meet with any ASIC personnel face to face. My documentation was sent to Mr Adrian Borchok by email. He has never contacted me. I do not know that he has even read it. He basically dismissed it as all a part of a conspiracy theory against CBA. Mrs Braund did meet members of ASIC.

Mrs Braund : Yes, I did. I went into marketplace twice. Could I just say to Senator John Williams that at the time I went to the cafe and had that lunch, Don was suspended at that stage. I had no knowledge of that. That is quite an interesting fact.

Senator WILLIAMS: He was suspended at the time?

Mrs Braund : Yes, he was already suspended.

Senator WILLIAMS: After you had signed documents?

Mrs Braund : Yes, that is correct.

Senator WHISH-WILSON: No-one even put you on to an alternative financial planner at that stage, to look after your portfolio?

CHAIR: Senator Whish-Wilson, can you just stop, please. We cannot hear you. Just stop while I speak to Hansard. Can we improve the quality of the volume. No, we cannot. In that case, Senator Whish-Wilson, could you speak closer to the mouthpiece because we are not hearing you.

Senator WHISH-WILSON: Certainly. I just want to ask Mrs Braund whether she had another financial planner allocated to her, to look after her investments when she mentioned the suspension of Don, the original adviser?

Mrs Braund : I was informed by Diana Walker that I should look at a newspaper article and that was to do with the suspension of Don. I rang Don's boss. His name was Damien Laidler. I explained to him what the problem was—the fraudulent use of signatures—which he did not answer. I demanded to have somebody of a senior rank as a financial planner and that is when he suggested Mr Jeff Morris. Jeff Morris has been my financial planner ever since.

Senator WHISH-WILSON: I just want to put on the record that no-one at Commonwealth Bank contacted you to let you know that your adviser had been suspended and that someone would be looking after your financial affairs?

Mrs Braund : That is correct.

CHAIR: Thank you, Senator Whish-Wilson. We are going to have to cut you off and hand over to Senator Fawcett.

Senator FAWCETT: Mrs Braund, I am very conscious of the time, so these are very quick questions and answers. You said on page 1 of your statement, in May 2010, that ASIC contacted you seeking your assistance. Why did they contact you?

Mrs Braund : I think it was in 2010 when the second letter went into CBA and I cc-ed them into the particular letter. That is when I made contact with them and then they made contact with me.

Senator FAWCETT: You said here that you had identified to them that the signatures on the document were not yours. Are they the same documents you are discussing where he stuck the piece of paper—

Mrs Braund : No, not that I know. When I was in there I did not have any documents with me. Simon Moran was recording and Jenny 'O' in ASIC was presenting me with pieces of paper. Some documents I had not looked at—I never saw—and those were the ones I believe were fraudulent. The other ones I believe were of my signature. My husband's signature was on some documents and, as he was failing with dementia, they were changing and they were trying to copy his signature.

Senator FAWCETT: Just to clarify: there are some documents where the signature you had put on the blank piece of page paper was used without your knowledge and there are some documents where you claim that they had essentially forged your signature, replicating—

Mrs Braund : Yes.

Senator FAWCETT: Are the ones where you rang and asked for a transaction to occur directly correlated to the documents where your paper signature, if you like, was stuck on?

Mrs Braund : You are talking about the ASIC ones that were presented to me and the ones that were fraudulently put on passport requests and things like that. I cannot answer that because it is too long ago that ASIC presented me with those particular documents. I would have to sight those documents again to say that they were exactly the ones that I have got here or I have just tabled. I would have to have the documents and then have a look.

Senator FAWCETT: Okay. For the ones that you have tabled, is there a correlation between the times that you phoned to authorise or request a transaction and documents that ended up with your signature via the sticky piece of paper?

Mrs Braund : I think the first case that we noted it in particular was when I was out of the country. So there were four occasions where we had this particular cut-and-paste, and then we found other documents with cut-and-paste. So we were more particular after that about finding it.

Senator FAWCETT: I understand you were out of the country, but does each of those occasions relate to a phone call that you made to authorise—

Mrs Braund : That is correct. Before I went away, I requested money to be able to use on the trip. And then, when we got those piece of paper later, we found that they were the same signatures all the way along. I had never been asked to write anything.

Senator FAWCETT: Okay. But, for the record, the adviser concerned could have felt that he was expediting your wishes by not faxing or in some other way obtaining your signature, as opposed to this being a completely fraudulent misrepresentation of your intent.

Mrs Braund : The first thing would be that he never, ever explained to me how to do it. It was only at the last part of my negotiations with him that he told me to fax in and then follow it up with a phone call. Those instructions were never, ever given to me, so I never knew—

Senator FAWCETT: Sure. Can I just come back to ASIC very quickly. You said later in your submission that ASIC then said they had other information from other sources; they did not need your information. Was that all the feedback they gave you? Did they give any other commentary about the evidence you had provided?

Mrs Braund : As I was leaving, Simon Moran said to me that he would write a report which he would send to me and then we would both sign off on it, and it never came. Then, a fortnight later, Jenny O rang me and said I was not needed any more—that evidence was not needed; they had enough.

Senator WILLIAMS: And no feedback from ASIC at all?

Mrs Braund : No feedback. Nothing.

Senator FAWCETT: Okay.

CHAIR: Thank you, Mrs Braund and Mrs Swan, for your attendance today, and thank you for your assistance. I know it has been a very difficult session, so thank you for coming.

Mrs Braund : Thank you very much.

Mrs Swan : Thank you for hearing us.