The Commonwealth Bank of Australia has said that it will repay more than 65% of the A$154m in required compensation estimated by the Australian Securities & Investments Commission.
In response to ASIC’s report, Financial advice: Fees for no service, the CBA said it would refund A$105m in fees, plus interest, to impacted customers. The refunds with interest will be completed by June 2017, the CBA said in statement. It did not explain why it was not paying the full amount, and company officials weren’t immediately available for comment on Friday.
The CBA was responding to ASIC’s decision, as reported here yesterday, to the names and details of some 21 regulated financial advisory institutions that it said have systematically failed to provide “ongoing advice” to clients, even though they billed these clients for it.
The 48-page report, which is posted on the ASIC website, covers holders of the Australian financial services license that, according to ASIC, are “product issuers or provide personal advice to retail clients, and that are part of AMP Ltd, Australia and New Zealand Banking Group [ANZ], Commonwealth Bank of Australia [CBA], Macquarie Group Ltd, National Australia Bank [NAB] and Westpac Banking Corp”.
In its response,CBA highlighted that in 2014, Commonwealth Financial Planning (CFPL), a CBA subsidiary, self-identified and reported to ASIC that some customers might not have received an annual review with their advice, which was integral to their ongoing service package. A similar issue was also identified with some customers of BW Financial Advice, another CBA business, the same year. Earlier this year CBA closed its BW (Bankwest) financial advice operation, shifting the advisers working for it to other CBA businesses.
CBA said that extensive work had been undertaken to identify customers that did not receive an annual review and prevent similar issues from occurring again in the future.
In its statement CBA said: “As part of CFPL’s long-term business transformation, we have made significant improvements, including to our systems, processes, supervision and training.
“In addition, following the Future of Financial Advice reforms, customers also receive annual fee disclosure statements and new customers receive opt-in notices every two years to continue their ongoing service package.”
Annabel Spring, a CBA group executive wealth management executive, apologised to customers who did not receive their annual review. “We are working hard to complete our review of customers and have commenced contacting customers to refund fees, wherever our records do not show that an annual review was provided,” she said.
“We will continue to look across our business for areas where we may have made mistakes and put things right for customers.”