The Commonwealth Bank has more than doubled the amount of compensation offered to customers who received bad advice, bringing up the total amount paid so far to $2 million.
Promontory Financial Group released its fourth report on CBA’s Open Advice Review (OAR) yesterday, covering the period between 1 September 2015 and 31 December 2015.
The bank’s advice review has been created to compensate clients who may have received poor advice from CBA dealer groups Commonwealth Financial Planning and Financial Wisdom between 1 September 2003 and 1 July 2012.
As at 31 December 2015, nearly 2,000 cases had reached an “assessment outcome”, with 69 of those receiving and accepting a compensation offer. The bank had offered $2.8 million to 171 customers, but 17 had rejected the offer while 96 have not yet decided.
Those offered compensation were deemed to have received poor advice or been charged an incorrect fee, the report said.
The new report shows CBA has more than doubled the amount of compensation that had been previously offered since the program’s commencement. In the period between 1 May 2015 and 31 August 2015, the bank had offered $950,252 to 53 customers but paid out $488,815 to 19 customers.
Promontory credits this hike in compensation to the bank speeding up its assessment process.
“The current period saw the bank significantly accelerate the number of cases it had assessed in the program,” the report said.
This acceleration can largely be attributed to the various initiatives and investments made in the program’s infrastructure earlier in 2015.”
Those changes to the program included the addition of more than 100 people to the review team, according to Promontory's third report.
Further, CBA has adopted new methods to retrieving the missing files for more than 1,000 cases, which continues be an obstacle in the compensation scheme. These changes include contacting former Financial Wisdom (FWL) advisers individually in addition to their aligned entities.
“For former FWL advisers that currently practice in larger third-party advice entities, the bank commenced contacting the relevant third-party entities to inform them of the need for the bank to contact their advisers,” the report said.
“The bank has then been working through a central contact point at the third-party entities to obtain the necessary customer files of each adviser.
“For all other former FWL advisers (not working in a large third-party advice entity), the bank plans to contact these advisers directly on an individual basis from February 2016.”
The fifth Open Advice Review report is scheduled for release at the end of May 2016.
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