Banking royal commission: planners at Commonwealth Bank subsidiary charged dead clients

Financial planners at a CBA subsidiary charged for services to clients who’d been dead for years, the bank inquiry heard.

CBA’s Marianne Perkovic resumed giving evidence after a torrid day yesterday. Pic: Stuart McEvoy

Financial planners at a Commonwealth Bank subsidiary charged fees for ongoing services to clients who had been dead for years, the banking royal commission has heard.

One planner’s client had been dead for seven years before the planner contacted his widow, and then took “no action” to fix the continuing charges, a document tendered to the commission this morning shows.

Management of Count Financial, the CBA subsidiary responsible for the planner, proposed that the planner be disciplined with a warning, the document, from its internal risk and compliance forum in late 2015, shows.

The planner was given a “low” rating and “had not conducted reviews for ongoing service clients”, Count management were told in the document.

“Recommend warning letter as a priority due to 4 instances and systemic issues identified,” management were told in an October 2015 update to the document.

Another adviser gave advice to a client in 2003 who died the following year. “Adviser is aware the client is dead but the OSF (ongoing service fee) continues to be charged,” the document records.

“Depending on outcome possible warning to adviser.”

In the case of another adviser, their last three quality assurance review revealed “no advice to any client” and that ongoing fees were being charged to dead clients.

No warning or other action was proposed.

CBA executive Marianne Perkovic, who was closely involved in the bank’s financial planning business at the time, told the commission the document was a management document and would have been updated.

Ms Perkovic continued to give evidence to the commission this morning.

During a torrid session in the stand yesterday afternoon, she repeatedly gave long, woolly answers to questions put by counsel assisting the commission, Michael Hodge, QC, prompting warnings from commissioner Kenneth Hayne.

Mr Hodge also accused her of dissembling in her answers to avoid admitting that CBA didn’t report a breach in which clients of another subsidiary, Commonwealth Financial Planning, were charged fees for services they did not receive, to the Australian Securities and Investments Commission for two years.

This morning, the commission heard that Count’s “orphan client book” — a group of clients whose planner had left the company and who had not yet been assigned a new adviser — brought in $1.5m a year in revenue.

Ms Perkovic admitted that Count knew in 2012 that clients were being charged fees for services they did not get.

However, the company did not report the breach to ASIC until September 2014.

Under the law governing financial services licensees, they are required to report serious breaches to ASIC within 10 days of discovering them.

Ms Perkovic said that a report to Count by big four accountancy firm Deloitte recommended the company “consider further investigation”.

“We needed to scope the problem and identify who the true orphans were in the book,” she said.

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