Australia's biggest bank has increased the amount of compensation offered to financial advice clients, according to KordaMentha Forensic’s final report on the bank's advice compensation.
In the final report, Compliance Report Part 4, published today, KordaMentha Forensic covers the last of CBA’s advice compensation program under the licence conditions, ASIC said in a statement.
The report states that CBA has offered a further $2.3 million to 232 clients of the five advisers.
>This is in addition to:
$4.95 million (including interest) offered to customers of different advisers under the licence conditions (reported in KordaMentha Forensic’s Compliance Report Parts 1 and 2); and
$1.9 million (including interest) offered to additional customers as a result of CBA’s review outside the licence conditions. The need for these reviews was identified during the licence conditions process.
This means that CBA has offered about $9.3 million to customers whose advice has been reviewed as a result of the licence conditions imposed by ASIC in August 2014, ASIC said.
The final report also provided KordaMentha Forensic’s assessment of compliance by Commonwealth Financial Planning and Financial Wisdom with processes they were required to follow under the licence conditions.
ASIC said the compliance breaches identified were failures by CBA to meet strict deadlines for providing information to clients. CBA subsequently addressed these failures by writing to the clients after the deadlines.
As a final step, before ASIC makes a decision on the removal of the additional licence conditions, it said the boards of directors of Commonwealth Financial Planning and Financial Wisdom must confirm in writing to ASIC that the licensees have complied with the additional conditions.
ASIC imposed additional conditions on the Australian Financial Services Licences of CBA’s Commonwealth Financial Planning and Financial Wisdom with the consent of the licensees in August 2014, and appointed KordaMentha Forensic as the independent expert to monitor the licensees’ compliance with the additional licence conditions.
ASIC said it took this action because the licensees did not apply review and remediation processes consistently to customers of 15 financial advisers, disadvantaging some customers.
The additional licence conditions required that CBA offer compensation for inappropriate advice that caused financial loss (where applicable) and offer affected customers up to $5,000 to get independent advice from an accountant, financial adviser or lawyer.
KordaMentha Forensic has produced five reports since the licence conditions took effect.