Count Financial class action trial pushed to Q1 2024
Alongside an announcement of $10.1 billion net profit after tax for the 2023 financial year, Commonwealth Bank’s full-year financial results indicate the Count Financial class action trial date has been fixed.
A class action commenced against Count Financial in the Federal Court last August relating to commissions paid to Count Financial financial advisers. Count Financial was a subsidiary of CBA until 1 October 2019 when it was acquired by CountPlus.
In the results, the bank said a trial date has now been fixed for March 2024.
CBA assumed the conduct of the defense in this matter on Count Financial’s behalf.
As at 30 June 2023, the bank’s results reveal it has an indemnity deed in place with Count Financial and Count Limited with a $530 million limit. This is up from the $300 million previously highlighted in the financial year 2021-22 and is intended to cover potential remediation of ongoing service failures to customers, inappropriate advice and other matters.
Outlining ongoing legal actions in its results announcement, CBA said: “The proceeding relates to commissions paid to Count Financial and its authorised representative financial advisers in respect of financial products (including insurance) and certain obligations of its financial advisers to provide ongoing advice in the period from 21 August 2014 to 21 August 2020.
“The claim also includes allegations (related to the receipt of commissions) that Count Financial engaged in misleading or deceptive conduct, and that Count Financial and its authorised representatives breached fiduciary duties owed to the applicant and group members.
“The claim seeks compensation and damages from Count Financial, including any profits resulting from the contraventions. A trial date is fixed for March 2024.”
Law firm Piper Alderman, which filed the class action, had previously anticipated that a trial would occur sometime between Q2 2023 and Q3 2023.
Last month, a $100 million settlement was reached with another former CBA subsidiary, Colonial First State Investments Limited (CFSIL), following a 2019 class action concerning grandfathered commissions.
A statement from CFSIL said the matter has now been settled, subject to court approval, following a confidential Court-ordered mediation. CFSIL denies the allegations and makes no admission of liability or wrongdoing.
Looking at CBA’s full-year financials, it also recognised an increase in the provision for aligned advice remediation issues and program costs of $299 million, including $163 million for ongoing service fees remediation, $91 million for other remediation matters, and $45 million for program costs during the financial year.
It also paid $838 million customer refunds for ongoing service fees, $2 million for other remediation matters, and utilised $108 million of program costs.
As at 30 June 2023, the provision held by the group in relation to aligned advice remediation was $262 million.
AUTHOR
Rhea Nath
Recommended for you
A former Northern Territory financial adviser has received a seven-year ban from ASIC, having been convicted of supplying dangerous drugs and receiving or possessing the proceeds of their sale.
Both Bain Capital and CC Capital have made revised bids for Insignia Financial after completing a period of due diligence.
The advice industry has reached triple-digit gains for the calendar year to date, with two licensees seeing gains of five during the week.
Targeting market leadership in digital advice, Bravura’s digital solutions are now available to over 6 million superannuation fund members.
