Centrepoint Alliance updates on fees for no service remediation
Centrepoint Alliance has shared details on provisions made for fees for no service remediation, having conducted an assessment of its employed and self-employed advisers.
In its half-year results to 31 December, the firm said it had previously put two provisions in place for this matter of $80,000 for employed advisers and $73,000 for self-employed advisers.
“Under the service arrangements with authorised representatives, customers generally pay an adviser service fee to receive an annual review, together with other services. The group is assessing whether customers who have paid for these services have been provided with the agreed services.
“An assessment of financial advisers employed by the group has been completed and where customer compensation is probable and can be reliably estimated, a provision was made at 30 June 2018. As at 31 December 2023, the provision balance is $80,000.”
On the group’s self-employed advice channel on its licensees – Professional Investment Services and Alliance Wealth – a subsequent review that commenced in February 2019 found some 17 per cent of the 245 firms were identified as having a fee for no service issue and refunds of $0.73 million were due.
“Refunds totalling $0.1 million remain due to be paid by the relevant practices," it said in the most recent results.
It has set aside a further $0.2 million provision for remediation costs payable to licensed advisers’ clients as part of acquiring the ClearView Advice business.
Centrepoint completed its acquisition of ClearView Advice in November 2021. ClearView had retained a 24.5 per cent stake as consideration for the sale but some 19.9 per cent of this was sold in November 2023 to COG Financial Services as ClearView opted to focus solely on life insurance.
In its FY23 results last August, the firm said the ClearView Advice acquisition had generated $10 million in revenue, up from $6.8 million in FY22.
In a Senate estimates hearing earlier this year, ASIC said fees for no service still remains an issue in financial services despite $4.7 billion in remuneration being paid following the Hayne royal commission.
ASIC deputy chair, Sarah Court, told the hearing it continues to investigate examples of alleged fees for no service.
“We can never presume to say that the issue of fee for no service or compliance and legacy systems has been completely fixed. There’s been progress made, there’s been billions of dollars of remediation paid, and there’s also been penalties applied by courts in relation to that conduct.
“But we continue to have cases where fees for no service are being alleged, and we continue to investigate them and take court action where it is appropriate.”
AUTHOR
Laura Dew
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
