The Commonwealth Bank is expected to pay out $1.9 million in compensation over poor advice provided by five financial planners, in the latest case of remediation at the country’s biggest bank.
The Australian Securities and Investments Commission on Tuesday said the bank had written to all 3500 customers of the five advisers, who had been flagged as part of a detailed compliance review.
The poor advice was detected as a result of extra licence conditions slapped on CBA by ASIC in 2014. Under these conditions, forensic accountants KordaMentha have been trawling through the bank’s records looking for instances of inappropriate advice that led to losses by clients.
The latest compliance report from KordaMentha, released by ASIC, said a review of some files had detected the five advisers, who were linked with $1.2 million in client losses. Compensation payments relating to these advisers ranged from $1500 to $202,000, the report said.
CBA confirmed that earlier this month it had offered $1.1 million in compensation to customers, and the bulk of its assessments of the advice had now been completed.
“All customers have been contacted to advise them that CBA is conducting a review of their advice, and the vast majority of assessment outcomes will be issued to customers by the end of January 2018,” the bank said.
The watchdog said it had been told by CBA that about $1.9 million was due to customers of the five advisers, who were not identified, and the amount of compensation paid was “likely to increase as CBA reviews further customer files”.
As a result of this finding, the bank is now carrying out a more detailed review of every piece of advice provided by these advisers to customers and so far. CBA’s spokesman said most of these assessments were now complete.
Financial advice has been a recurring problem for Australia’s banks in recent years, especially at CBA, and the issue is tipped to be a key area examined by the royal commission into misconduct in financial services.