Under cross-examination at the royal commission hearings today, Ms Elkins, who is executive general manager of the bank’s CFS wealth subsidiary, was asked about the relationship between CFS and licensees who use its platform, including those owned by CBA.
Asked whether CFS has measures in place to ensure advisers and licensees using its platforms adhere to the FOFA requirement to distribute fee disclosure statements (FDSs), Ms Elkins explained that it is normal practice for the licensee to hold liability for this under “dealer terms of trade”, echoing similar testimony offered by AMP’s John Keating this morning.
Pressed further about this arrangement and why CFS does not take steps to ensure compliance with the FDS obligation, Ms Elkins revealed the company will consider changing its policy.
“You could require, couldn’t you, dealer groups to confirm in respect of each client that they have fulfilled their obligation in respect of fee disclosure statements,” asked counsel assisting Mark Costello. “[Are there] steps you could add, is there any current plan to add [steps]?”
Ms Elkins responded: “To be honest, I think through the course of the commission this week, there has been… It will be something that I will be going back to the office and doing, yes.”
She went on to admit that the way CFS “administers the dealer terms of trade” could be strengthened, adding that the business is “continually looking for ways to do things better.”
The announcement followed a heated exchange from commissioner Kenneth Hayne, who asked Ms Elkins why it did not consider ending the relationship with CBA licensees when compliance breaches were confirmed during the Commonwealth Financial Planning scandal.
CFS hasn’t faced a situation where it seriously considered terminating its relationship with a CBA licensee, Ms Elkins said.
‘I think that’s the point,” commissioner Hayne responded.
The cross-examination of CBA executives is currently underway. Follow live at https://www.ifa.com.au/strategy/25404-royal-commission-financial-advice-hearings-live-blog
Good to see pharmaceutical companies will finally be held responsible to ensure their products are never abused, never prescribed inappropriately by doctors and only ever used in accordance with the directions on the packets
That doesn’t work as an anology for several reasons, neither would prosecuting Coles for obesity. Bank employee?
It’s a very good analogy, as is your Coles one. Thanks for contributing.
Pointing out the stupidity of CFS doing FDS compliance has nothing to do with making excuses for banks. Banks do plenty of things wrong in other areas and should be held to account for them. But trying to impose completely inappropriate solutions on a particular part of the banks’ operations just because you believe “banks are evil” is counterproductive. It does more harm to consumers than anyone else.
A good example of The Dunning Kruger effect here…
CFS is a product provider. FOFA compliance is nothing to do with them. That’s the responsibility of licensees and ASIC. It’s like saying Toyota should be responsible for ensuring people don’t speed in Toyota cars.
If the RC has a problem with CBA’s licensee compliance, then recommend more penalties for those licensees. If the RC has an issue with the principle of vertical integration, then force product providers to get rid of their advice arms. But forcing product companies like CFS to impose yet another layer of compliance on advisers will just make things even more complex and expensive for consumers.
Very gutless for Elkins to even entertain the idea. I’m an independent adviser who chooses to use CFS platforms because they have good functionality for a low price. But if CFS tries to impose an additional layer of FDS compliance on me just because their execs have been PR coached to always be apologetic and contrite no matter how stupid the question, I’ll be abandoning CFS.
You are missing the point. The idea of a platform being able to perform a simple administrative task such as FDSs is actually a good idea for all and sundry.
If it’s CFS doing it, it will be every product provider eventually doing it, IOOF, BT etc etc. I don’t think you’ll find the Product Provider will be producing an “indivudual and tailored” FDS. The product provider, in this case CFS, has now an additional obligation to ensure “each” client is getting a FDS when they collect fees. For advisers it will mean a declaration or some sign off being made to the platform saying a FDS is required and was provided. i.e yet another form or another process the adviser will need to sign or complete.
Monitoring the fees and FDS makes sense esp for Super where the Trustee has extra legislative responsibility to the Member
Why weren’t you taking more responsibility in the first place Linda Elkins?
So, Ken Haynes thinks that Investment Managers should be doing ASIC’s job? WTF
No actually, everyone just expects Executives to the doing THEIR job! BTW it’s Hayne genius.