CBA customer remediation bill blows out to $800m

The Commonwealth Bank of Australia has increased the amount it is putting aside to pay back customers who received poor financial advice by $300 million, taking its total bill to $834 million.

The bigger budget will reimburse customers of CBA's aligned adviser businesses, including Count Financial, Financial Wisdom and CFP-Pathways. The bank said a significant amount of money had been spent already on a comprehensive program to ensure all customers who had been charged fees for no service or inappropriate advice would be compensated.

CBA has increased its customer remediation bill by $300 million. Credit: AFR

The increased provision assumes an average refund rate of 37 per cent of the ongoing service fees collected over the past decade.

The bank did not rule out increasing its budget for customer remediation. "While these additional provisions are estimates, that may change. CBA believes it has adequately provided for these issues. CBA will continue to monitor the adequacy of these provisions," the bank said in a statement.

CBA sold its financial planning arm Count Financial for a paltry $2.5 million in June last year after buying the network of financial planners for $373 million in 2011. The sale included a $200 million indemnity against any remediation matters arising from past issues at the firm.

Count Financial said this had been expanded to $300 million and could be further increased under certain triggers relating to the discovery of further misconduct.

"Remediation amounts will not be known until individual cases have been reviewed and compensation offers made," the company said in a statement.

Count Financial was among the CBA subsidiaries revealed by the banking royal commission to be charging dead customers for financial advice. In one case, a customer was charged fees for more than 10 years after their death.

Since the royal commission, CBA has accelerated its exit from wealth management. In June this year, one of its aligned businesses Financial Wisdom closed and advisers working at another business CFP-Pathways were allowed to transition to a self-licensing arrangement or move to another licensee.