The Australian Securities and Investments Commission (Asic) has released findings on two Commonwealth Bank of Australia (CBA) subsidiaries – Commonwealth Financial Planning (CFPL) and BW Financial Advice (BWFA) – after accepting an enforceable undertaking in April this year.
The enforceable undertaking – an alternative to prosecution that allows a company to voluntarily enter into a binding agreement to resolve and remedy any breach and/or harm – followed Asic’s Fees for no service report in 2016, where the corporate regulator found that customers paid for financial advice they never received.
Remediation investigation
The undertaking bound CFPL to appoint Ernst & Young (EY) to investigate and produce a report considering whether the CBA subsidiary had taken “every reasonable step to ensure customers who should have received remediation in the [1 July 2015 to 31 January 2018] period did receive that remediation”.
EY’s findings concluded that there was no evidence to suggest CFPL did not take reasonable steps to ensure all their clients eligible for remediation received it, for the periods 1 July 2015 to 31 May 2016 and 5 June 2017 to 31 January 2018; and that it was taking all reasonable steps to ensure the same outcome for the period ranging from 1 June 2016 to 4 June 2017 (Period 2).
CFPL and BWFA, under the enforceable undertaking, agreed in April to make a community benefit payment of A$3m (£1.6m, $2.1m, €1.9m).
Asic has also said that a further re-assessment of Period 2 will be made by EY in January 2019.
Costly scandal
Over the course of the fees for no service investigation, ANZ Bank has been fined A$3m and Asic has also launched action against two National Australia Bank trustees over A$100m of fees paid for advice that was not provided.
The industry-wide scandal is believed to have cost customers around A$1bn.
