CBA has entered into an enforceable undertaking with ASIC over the actions of two wealth management subsidiaries, with the bank's new chief executive Matt Comyn offering an apology to customers.
Commonwealth Bank subsidiaries Commonwealth Financial Planning (CFPL) and BW Financial Advice (BWFA) have entered into an enforceable undertaking (EU) with ASIC over fees charged for advice that was not provided, according to a statement by the regulator.
The EU comes as a result of an ASIC investigation that found clients of the two groups were charged for annual reviews in ongoing service packages that were not then provided.
“Both CFPL and BWFA have acknowledged in the EU that ASIC's concerns were reasonably held,” the regulator said in a statement.
Under the EU, CFPL and BWFA will make a community benefit payment of $3 million in total.
The CBA subsidiaries will also have to provide attestation from senior management that changes to compliance systems and processes have been made; are “reasonably adequate to track CFPL's contractual obligations;” and that reasonable steps have been taken to remediate affected customers.
In a separate statement by CBA, chief executive Matt Comyn said the bank recognised it had “failed customers in our advice businesses over the past decade”.
“These failures have resulted in a range of regulatory actions including imposition of licence conditions and remediation programs,” he said.
“This is unacceptable and we owe our customers an apology for letting them down. Providing quality financial advice is critical for our customers.
“Next week the royal commission will hear more about issues in financial advice where we have failed our customers and we need to listen and learn from what we hear.”
Commenting on the EU, ASIC deputy chair Peter Kell noted that the EU followed a similar one with ANZ, announced on 6 April.
“Our report into Fees For No Service in October 2016 identified the major financial institutions' systemic failures in this area, and called for fair compensation to be paid to customers who did not receive the advice reviews that they were promised and paid for,” Mr Kell said.
“These failures show that all too often the financial institutions prioritised revenue and fee generation over the delivery of advice and services paid for by their customers.”
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