Forensic report identifies more CBA problematic client files
The Commonwealth Bank is facing more advice remediation challenges, with a new forensic report on past activities by Commonwealth Financial Planning (CFPL) and Financial Wisdom Limited (FWL) advisers identifying more problems.
The second forensic report conducted by KordaMentha Forensic has been released by the Australian Securities and Investments Commission (ASIC) and was aimed at identifying high risk advisers and consequently reviewing and compensating affected customers.
According to ASIC, the report has found that in 2012. CFPL and FWL took reasonable steps to identify which clients of a group of former advisers should have been included in a compensation program whilst also finding that CFPL and FWL took reasonable steps to identify other potentially high-risk advisers.
However, it added that KordaMentha Forensic had found that that CFPL and FWL did not have a reasonable basis for the processes they used to determine whether a group of the potentially high-risk advisers they identified should have been included in a compensation program.
ASIC said that, as a result of the KordaMentha Forensic finding, CFPL and FWL were now required to review client files of 17 advisers to determine whether the advisers should be included in a compensation program.
"If any of their clients are found to have lost money as a result of inappropriate advice, they will be compensated in a process overseen by KordaMentha Forensic," it said.
ASIC said KordaMentha Forensic's third report, the Compliance Report, would report in 2016 on its audit of whether CFPL and FWL have complied with their additional AFS licence conditions, including the implementation of advice review and client compensation activities arising from KordaMentha Forensic's first two reports.
Commenting on the ASIC announcement, Commonwealth Bank Group Executive Wealth Management, Annabel Spring, said the bank was committed to doing the right thing for its customers.
“This report provides another layer of assurance and demonstrates how much we have done and continue to do to identify any past issues and put them right,” she said.
Spring said the licensees would now review six customer files from 17 advisers to confirm whether the advice customers received before 2012 was appropriate and that this was in addition to previous reviews of their advice that were completed prior to, and including, 2012.
Recommended for you
It can be extremely hard to realise the gains from financial advice M&A, according to Peloton Partners’ Rob Jones, and more could be gained from firms looking inward at their own practice.
With platforms reporting their quarterly results, there is a clear divide in the adviser markets they are targeting, according to platform specialist Recep Peker, and which would be right for your clients.
The Federal Court has imposed a $10 million penalty on Macquarie Bank for failing to prevent and control unauthorised fee transactions by third parties including financial advisers.
A financial advice firm has seen a weekly decline of 10 advisers, with all moving to a new licensee, while Centrepoint Alliance continues its “growth story”.
