The Commonwealth Bank (CBA) has sought to make clear that it, rather than the Australian Securities and Investments Commission (ASIC) discovered the problem around advice clients being billed for advice they did not receive and that it self-reported the problem.
Amid the regulator’s high profile reporting of the ANZ, NAB, CBA, Westpac and AMP licensees having paid around $23.7 million in refunds for fees charged without the actual provision of advice, CBA said it had been working to identify and remediate customers since 2014 and had already started refunding customer fees.
“The refunds with interest will be completed by June 2017,” it said.
A statement issued by CBA pointed out that the ASIC report had noted 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.
The ASIC report issued on Thursday acknowledged the work being carried out by the licensees, but in looking at the root cause of the problem said “ASIC considers that the fee-for-service failures show that AFS licensees and advisers prioritised revenue and fee generation over the delivery of advice and services paid for by their customers”.
However, the ASIC report also noted that the failures had largely occurred before the implementation of the Future of Financial Advice (FOFA).
Nonetheless, the report stated: “The FOFA reforms in 2013 banned certain commissions for new advice, and required increased transparency around fees charged and services provided through fee disclosure statements and opt-in renewal notices.
“However, we are concerned that the industry (including licensees and advisers) may still have a culture of reliance on ongoing trail revenue (through commissions and fees) for a portion of their income, without necessarily providing advice to customers in return.”
