In April, ASIC accepted an enforceable undertaking from Commonwealth Bank subsidiaries Commonwealth Financial Planning (CFPL) and BW Financial Advice (BWFA) over fees charged for advice that was not provided.
One undertaking required of CFPL was to appoint Ernst & Young (EY) to prepare an independent expert report that considered:
- whether CFPL had taken reasonable steps to ensure customers who should have received remediation in the 31-month period from 1 July 2015 to 31 January 2018 did receive that remediation. ASIC’s previous oversight of CFPL’s remediation had considered the period to 30 June 2015; and
- whether CFPL had put in place systems, processes and controls to meet its contractual obligations to customers who are paying ongoing service fees. In relation to the remediation of CFPL customers.
In relation to the remediation of CFPL customers, EY found that:
- for the periods 1 July 2015 to 31 May 2016 and 5 June 2017 to 31 January 2018, there was no evidence to suggest that CFPL had not taken reasonable steps to ensure that customers who should have received remediation did receive that remediation; and
- for the period 1 June 2016 to 4 June 2017 (Period 2), there had been a lower level of customer testing during this period and further work by CFPL was required. EY found that CFPL is in the process of taking reasonable steps to identify and remediate those customers who should have received remediation.
ASIC said EY will re-assess and report on Period 2 in January 2019 once CFPL has undertaken additional remediation work for that period.
As for EY’s findings in relation to whether CFPL had put in place adequate systems, processes and controls to meet its contractual obligations to customers who are paying ongoing service fees, EY found that there was nothing to suggest that those systems, processes and controls are not reasonably adequate to ensure that CFPL is able to discharge its obligations to its customers.
However, EY noted that CFPL could make further improvements to address:
- a low level of control awareness within the business;
- a high prevalence of manual processes and controls;
- limitations on CFPL’s ability to analyse and report information for tracking and reporting of compliance centrally; and
- the sustainability of its manually intensive processes.
On this front, ASIC said EY will assess and report on whether CFPL has addressed EY’s findings, through the implementation of systems and process improvements, in January 2019.
Further, ASIC noted CFPL has requested an extension of time for EY to produce its final report and for CFPL to provide its senior executive attestation as required under the EU, to 31 January 2019.
It said this extension of time will allow CFPL to undertake the additional work required in relation to the time period from 1 June 2016 to 4 June 2017 and to implement the recommendations made by EY to further improve CFPL’s systems, processes and controls.
ASIC also said CFPL is required to submit a detailed plan setting out the specific actions that it will undertake to ensure that it addresses EY’s findings and recommendations.
In addition, it said the EU will be amended to reflect this additional plan, the timing of the final report and senior executive attestation.
C/wealth Bank has had so many chances to sort it all out – what next. AMP chairman is another from the C/Wealth Bank . When will ,Government act – criminal offences deserve goal but this will never happenl.
End it all by banning banks from the financial planning sector all together.
8% commissions – on what?
No evidence to suggest they had not taken reasonable steps… What exactly is the evidence that you would find of steps that have not been taken? July 2015 is three years ago. Did they remediate their clients or not?
Surely there is a conflict of interest with EY reporting on the CBA given the ties that these two companies have. Independent?? Love the weasel words in the report “…there is no evidence to suggest that CFPL had not taken reasonable steps…”
The quicker Hayne can make recommendations which spell out how ASIC should work properly to benefit all (ie consumers and advisers) and not just the big institutions the better………..or maybe just wishful thinking.
Australia’s entire banking system has been milking the Australian people and hoodwinking the Australian Government for decades. I’ve been a very close observer for 20 years and never thought these big institutions would ever be brought to account. International banking arrangements are bigger than any government. I really think the RC is only the start of reform. Banking needs to be redefined. Why do we need money? Money provides a means of exchanging goods and services through the community. My view is that banking thought money was for the taking more than for its real purpose. I’ve been in the financial industry now for over 30 years. It is worse today than what it was back when I first landed a job in the industry.
What when plans were a few pages and no page numbers, no or minimal disclosure , grandfathered qualifications and 8 per cent commissions – give me a break
8% on what?