- Marianne Perkovic, Executive General Manager of Commonwealth Private, came under intense questioning over the “fees for no service” issue in the financial services Royal Commission hearings today.
- She confirmed that customers are charged if their financial planner doesn’t conduct an annual review, through an opt-out process.
- The Royal Commissioner warned her to answer questions “for her own safety”.
Customers of CBA’s Commonwealth Financial Planning still have to pay a fee even if they opt out of an annual review each year, the Financial Services Royal Commission has heard.
The Royal Commission has started its public investigation of the fees charged to bank customers for financial advice they didn’t get.
In a series of questions today to a senior executive at the Commonwealth, it became clear that customers are now charged for a package, the fee for which isn’t reduced when a customer doesn’t get an annual review.
In the witness chair today was Marianne Perkovic, Executive General Manager of Commonwealth Private. She also worked at Count, a financial planning business before joining the Commonwealth in 2010. Count was bought by CBA.
She agreed with Michael Hodge, senior counsel assisting the commission, that a key issue at Commonwealth Financial Planning was overcharging of ongoing service fees.
“We found and remediated that,” she said.
The bank had also offered $118.5 million in refunds to the end of December last year.
“We are waiting for some confirmations to make some payments,” she said. “About 98% of payments have been made.”
Perkovic said customers had been charged fees even if they didn’t want to have an annual review meeting with a financial adviser.
“It’s actually up to the individual client to decide (whether to have an annual review),” she told the commission.
Perkovic said it had been hard to determine whether or not a review had been done because of a lack of supervision at that time.
“We now ensure that 100% of clients get a review,” she said. “Every client that is signed up for an ongoing service package will get a review.”
Hodge, senior counsel assisting, asked: “If a client declines a review, they don’t have to pay a fee?”
After being asked repeatedly whether or not customers were charged a fee now even if they declined a review, the royal commissioner intervened.
“You will get on better if you listen to counsel’s question … and answer what you are asked,” Justice Kenneth Hayne.
Perkovic said: “When the client declines a review … then it is at their discretion … they have full transparency that they are getting charged for the ongoing service package.”
Annual fees start at around $1,500 and go to more than $20,000.
The royal commissioner warned Perkovic three times, “for her own safety”, to answer the questions put to her.
She said the bank was going through a period of transformation.
“There are a whole range of issues we need to change in the business,” she said.
Yesterday, the royal commission detailed false or misleading statements by AMP to the corporate regulator ASIC about fees it charged customers for advice not given.
The commission has heard, and a senior AMP executive confirmed, a long list of letters, emails and reports showing that the company tried to keep significant information from ASIC.
Australia’s major banks face 15 different major inquiries, including the Royal Commission, following a series of scandals involving giving poor financial advice to customers.
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