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.
CFPL will also be required to “provide an attestation from senior management setting out the material changes” made to the business’ compliance structures, as well as further attestations regarding the business’ capacity to track its adherence to contractual obligations and taken reasonable steps to identify and remediate affected ongoing service clients.
“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,” ASIC deputy chair Peter Kell said.
“This enforceable undertaking follows on from the earlier enforceable undertaking accepted by ASIC in relation to ANZ’s fees for no service conduct. 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.”
Fee for service. Commission in every way but renews each year.
The next RORT and CON that ASIC will need to sort out when they wake up.
Not so.
Commissions are paid by the product provider for outsourcing their service costs.
Fees are paid by the client for advice.
Commissions are % based.
Fees are (usually) a flat amount.
Commissions continue for as long as the product.
Fees can be cancelled at any time by the client, and automatically cancel if they don’t actively re-sign every 2 years.
Big differences.
What they do have in common is that ASIC has been active in severely curtailing both in recent years.
Have you been living under a rock?
Dear FPA, how is this possible? Is Commonwealth Financial Planning not a member of your Professional Partner Program? Is this program not a mark of confidence and Quality Assurance for consumers?
By the way, FPA, I’m sure you know that another Professional Partner, StatePlus, just copped a fine and an EU for this same matter.
Where is the Quality Assurance? Does this not devalue your program for the remaining Members?
And talking of devaluation, there’s this whole thing about the CFP Course / FASEA business…
Time for Leadership FPA. Step up.
One EU is unlucky, 2 is just damned carelessness!
If this was an adiser he would not only be banned for life & the FPA would have dropped them like a hot chip, they would not have even enquired as to the reasoning behind the problem. they would definitely not continued to support him in any way, complete double standard. FPA is not and has never been on the side of the adviser is not an association for advisers in anyway.
FASEA want advisers to belong to a code monitoring body. Advisers need to now write to FASEA opposed to this compulsory membership of the FPA. Read my comments above and write to FASEA prior to 1 June and use this as example as to why firms like the FPA should not be the sole and only option as a source and a not ethical bodies to be overseeing advisers. If you don’t, you’ll be forced to join the FPA or AFA and compulsory membership of a firm that gets kickbacks from the large banks is not healthy at all. I’m a member but I’m not in favour of these firms being the sole body.
When will FPA and ASIC show some intestinal fortitude and remove CBA?!?….anyhow I want a new bicycle for Christmas, so I’m writing to Santa ?
Thanks…i wonder if senior mgmt pushing for sales targets (and their bonuses) will actually get scrutinised in the royal commission. Greed comes in tertiary educated disguises..
Great timing just before their Royal Commission hearing. Maybe this is their attempt for receive some leniency from the Royal Commission
Commonwealth Financial Planning (CFP) is a member of the FPA. They pay fees that are disclosed as one on their annual report as member fees. How is it possible that the FPA could stand up for our brothers and sisters working as CBA Advisers when there getting payments from CFP. Just whose needs are they representing? Is it the CBA, the lone adviser, the public? You see FASEA is just as confused now as to who they represent and they’re just as confused when the FPA was lobbying the Government about Opt in.
CBA Financial Planning is an FPA member and a member of the Professional Partner Program. A program that allows firms like CFP to shape the future of advice in Australia. What will be the reaction of the FPA be as a result of this fine and a member caught in this position. Very important given we’re going through FASEA and a key business partner of the FPA is before a Royal Commission and now caught out by ASIC. If we want FASEA to recognise firms like the FPA as being professional and truly representing the needs of all Australians and the Voice of planners, than these relationships must be scrapped now. If I was running the FPA I would impose a fine on CBA. This is why CPA Australia when it comes to legislation and FASEA can get things done. You have Opt in, you have LIF, Your CFP Course is not recognised by FASEA because the FPA is getting direction by firms subject to a Royal Commission. TIME FOR A CHANGE within the FPA…time do things differently.
Stop picking on the CBA, leave the poor little criminals alone!!!!
While as an ex-employee I’ve also chortled with glee over this headline (and it was the best decision I ever made), there are two aspects which are far less amusing:
1. While some advisers (everywhere – not just at CBA) are clearly bad eggs, how much of the poor behaviour by CBA advisers comes from the pressure they are placed under by management to achieve targets? Don’t forget, most of these advisers sit in a bank branch without a single ‘support staff’ physically present to help them do their jobs. That’s right – they do everything from the advice, to the paperwork, to the photocopying – something most IFAs do away with by employing a support person as soon as their business can sustain it. Perhaps it is CBA’s management that should wear the blame?
2. While not excusing the lack of service, the ongoing service agreements that I saw (and clients signed) were worded so that the ‘offer’ of an annual review was what would be provided. ASIC have somehow interpreted this to mean that because a client pays fees, that they are paying for an annual review (not just the offer of one), and it MUST be provided – and I have seen fees refunded as a result. This is somewhat scary, because who here, or anywhere, actually has 100% of their client base attend every single scheduled review? I strongly suspect that when ASIC takes this ‘fee for no service’ investigation deeper into the mid and lower tier licensees (which they’ve openly said that they will do), that the shoe will be on the other foot for a lot of us.
Overall though, I hope this sends a message loud and clear to the product manufacturers to get out of advice. The economies of scale which can be harnessed by the big end of town for profit making in the wealth game are coming at the expense of their planners’ livelihoods and reputations and their clients’ financial well-being. Vertical integration needs to go – and that goes for Industry Super too.