Royal commission: Commonwealth Bank charged dead clients for years

Financial planners at a Commonwealth Bank subsidiary charged fees for services to clients who had been dead for years.

Commonwealth Bank executive Marianne Perkovic leaves the banking royal commission in Melbourne yesterday. Picture: AAP

Financial planners at a Commonwealth Bank subsidiary charged fees for 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 yesterday showed.

Management of Count Financial, the CBA subsidiary responsible for the planner, proposed that the planner be disciplined with a warning, the document from late 2015 shows.

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

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

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 reviews 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.

During a torrid session in the stand on Wednesday, Ms Perkovic 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 & Investments Commission for two years.

The commission yesterday 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 $1.5 million a year in revenue.

Ms Perkovic admitted that Count knew in 2012 that clients were being charged fees for ser­vices they did not get, but 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 a report to Count by 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.