Consumer group Choice has raised concerns about the CBA’s Open Advice Review and questioned whether eligible former customers are being sufficiently contacted.
In its submission to the ‘scrutiny of financial advice’ report, Choice said efforts to ensure “independent and thorough” responses to institutional misconduct are welcome, but also took issue with the communications strategy of the Commonwealth Bank’s Open Advice Review (OAR).
“Gaps in communications remain,” the submission contends. “It is unclear how or if CBA will be proactively contacting customers who received financial advice through Financial Wisdom who are also eligible for review.
“In addition, Choice has concerns about efforts being made to contact people who are no longer customers of CBA but are still eligible for the review.”
However, a submission offered by law firm Maurice Blackburn – which is involved in the OAR process – has praised the bank's remediation efforts.
More broadly the submission argues that “financial sector response” to misconduct has been “inadequate”, arguing that industry responses came only after heated parliamentary and media scrutiny.
“Choice encourages the committee to investigate further cases of misconduct through the inquiry, particularly any possible misconduct from major financial institutions,” the submission argues.
It also calls for research to be conducted into forms of conflicted remuneration not covered by FOFA, singling out asset-based fees as posing a “high” risk to consumers in terms of their ability to influence advice given.
“The committee should consider recommending an extension of the ban on conflicted remuneration to asset-based fees,” the submission states.
“Asset-based fees are ongoing fees calculated as a percentage of the total funds under advice.
“They have many of the same market distorting features created by commissions, which have already been recognised as inappropriate for advisers.”
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