Australia’s biggest mortgage provider has confirmed that it will refund approximately $105 million in fees plus interest following the release of an ASIC report into financial advice.
CBA yesterday confirmed it has been working to identify and remediate customers since 2014 and has already commenced refunding customer fees. The refunds with interest will be completed by June 2017.
ASIC yesterday released a report as part of its Wealth Management Project. The report focuses on the conduct of Australia's largest financial advice firms and identifies instances where clients have paid for ongoing advice services which they haven't received.
It highlighted that in 2014 Commonwealth Financial Planning Limited (CFPL) self-identified and reported to ASIC that some customers may not have received an annual review with their adviser, which was the key part of their ongoing service package.
A similar issue was identified for some BW Financial Advice (BWFA) customers in the same year.
In a statement CBA said that CFPL and BWFA have worked with an independent expert and ASIC to identify potentially affected customers and ensure the remediation approach is fair and consistent.
It is expected approximately $105 million plus interest will be refunded to customers. In line with CBA’s conservative approach, this amount was fully provided for in prior years.
“We apologise to our customers who did not receive their annual review,” CBA’s group executive wealth management Annabel Spring said. “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.
“We will continue to look across our business for areas where we may have made mistakes and put things right for customers.”
The ASIC report, titled Financial advice: Fees for no service, noted that the financial advice arms of AMP, ANZ, NAB and Westpac are all included in the corporate watchdog’s review of the sector.
ANZ yesterday released a statement apologising to clients. The bank said yesterday’s report from ASIC included a situation previously announced by ANZ in April 2015 where some financial planning clients did not receive the documented annual review component of the Prime Access package of services between 2006 and 2013.
“We want to again apologise to our clients for not delivering all of the Prime Access services we promised and assure them we have been working hard to finalise remaining reimbursements by the end of this year,” ANZ managing director, wealth Australia, Alexis George said.
“We’ve also significantly improved our processes, training and compliance supervision to ensure this does not happen again,” Ms George said.
ANZ has already reimbursed more than $20 million of Prime Access adviser service fees (plus earnings) since August 2015.
In total, the major lender said it expects to reimburse about $49 million to around 10,300 customers by the end of 2016.
[Related: Lender caught over-charging consumers]