Commonwealth Bank says it has tightened up its monitoring of life insurance advisers following the Australian Securities and Investments Commission’s report on the life industry last year.

Wealth Management Group Executive Annabel Spring says the bank has put in an “adviser early warning” system.

This is despite the bank not being cited in the regulator’s report as an organisation giving poor life advice.

“One of the systems we have put into our business is an adviser early warning system, which looks at all the issues that have caused us to provide inappropriate advice,” she told the Senate Economics References Committee in Canberra last week.

“One of those issues [is] insurance, and the churning of insurance.

“We have looked at that system, we have put in that system, and we monitor our advisers using that system.

“One [step] is the system and processes we have put in place; the second is obviously the culture and the education and training we have put our advisers through.”

The committee asked why the bank is still paying disgraced adviser Don Nguyen’s income protection claim.

“I do not understand how Mr Nguyen continues to be paid income protection of at least $70,000 per annum under his Commonwealth Bank policy [through] CommInsure,” Nick Xenophon said.

“It is a matter of paying someone for a stress claim after being exposed for being involved in improper activities, and he was stuck off as a financial adviser. I think I know what I would be advising if I had a client seeing me about that. I would say, ‘You’re in trouble with claiming.’ Who made the decision from CommInsure?”

CommBank CEO Ian Narev told the committee Mr Nguyen held the policy personally, not as a staff member.

“We have taken legal advice on whether we are required to pay under the policy, and the legal advice is that we are,” he said.

Senator Xenophon asked why CommInsure has not challenged the payment.

“We have had a good, long look at this, and I am sure you would appreciate that if we did not have to pay Mr Nguyen we would be looking for ways not to do so,” Mr Narev said.