Commonwealth Bank hit by ASIC for failure to provide promised reviews

CBA has apologised and pledged improvements after charging thousands of customers for abvice they didn’t receive.

ASIC says that all too often, banks put revenue over the delivery of services paid for by their customers. Picture: Hollie Adams.

Commonwealth Bank has pledged to improve its financial advice after it signed an enforceable undertaking with the Australian Securities Investment Commission over its failure to provide annual reviews to about 31,500 customers.

“We recognise the fact that we have failed customers in our advice businesses over the past decade,” said chief executive Matt Comyn.

“These failures have resulted in a range of regulatory actions including imposition of licence conditions and remediation programs.

“This is unacceptable and we owe our customers an apology for letting them down. Providing quality financial advice is critical for our customers.”

As part of the arrangement with ASIC, CBA subsidiaries Commonwealth Financial Planning Ltd and BW Financial Advice Ltd will together pay a community benefit of $3 million in total, while CFPL will also provide evidence of material changes to compliance systems.

BFAL ceased trading in October 2016, so CFPL is the focus on the compliance improvements, ASIC said.

“Today less than one in four Australians receive financial advice, so it is essential that we must do this in a way that is affordable, simple and safe, while complying with our regulatory obligations and community expectations,” Mr Comyn said.

“Next week the royal commission will hear more about issues in financial advice where we have failed our customers and we need to listen and learn from what we hear.”

It comes after the two CBA subsidiary companies agreed to compensate affected customers, paying a total of approximately $88.6m plus interest to these customers.

“Our report into fees for no service in October 2016 identified the major financial institutions’ systemic failures in this area, and called for fair compensation to be paid to customers who did not receive the advice reviews that they were promised and paid for,” said ASIC deputy chair Peter Kell.

“This enforceable undertaking follows on from the earlier enforceable undertaking accepted by ASIC in relation to ANZ’s fees for no-service conduct.

“These failures show that all too often the financial institutions prioritised revenue and fee generation over the delivery of advice and services paid for by their customers.”