CBA pays $79k in advice compensation
The Commonwealth Bank's (CBA) open advice review program has garnered expressions of interest from more than 22,000 customers, with around 7000 confirming they want their advice reviewed.
In its second report of the open advice review program, the independent program arbitrator Promontory Financial Group said the CBA had paid $79,702 in compensation to clients as at 30 April 2015.
This amount related to three cases in the program.
CBA offered $562,513 of compensation in total.
The $482,811 in compensation that had been offered but not yet paid relates to cases where the compensation case was still being reviewed by the customer or the bank. This amounts to $248,307.
A further $234,504 worth of compensation had been accepted by the customer but was not paid yet because the bank hadn't processed it yet as at 30 April.
Customer file retrieval continues to pose challenges, including difficulty in verifying whether a customer's advice files are complete since they could be distributed across various locations, the possibility of older customer advice files having been destroyed in line with the bank's policy, poor record management in some of the bank's document filing facilities, and gaps in data capture, where the name of each adviser who gave the advice to the customer was missing.
"The file retrieval process is critical in the Program," the report said.
"In practical terms, a case assessment cannot commence until every effort is made to retrieve a file that adequately sets out the advice the customer received (and the basis on which that advice was provided)."
Promontory released its first report in January this year, which showed CBA's advice remediation program had attracted more than 4500 cases from wronged customers in its first few months.
The bank had contacted 98 per cent of the registered customers and sent information to 95 per cent in the six months following the review program's launch.
Since this time, the bank had started case assessments for 346 cases, of which 208 cases have progressed to consideration of assessment outcome stage, including 60 cases assessed as part of the pilot program.
The bank offered compensation to 28 out of 208 cases (13 per cent), which were assessed as having received poor advice, inappropriate application of advice, or incorrect fees, which resulted in financial loss for the customer.
But 174 cases (84 per cent) were assessed as having received appropriate advice and received no compensation.
The remaining six cases (three per cent) were deemed to have received poor advice but received no compensation because the poor advice did not result in financial loss.
The open advice review program has now moved to the review stage.
AUTHOR
Malavika Santhebennur
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
