Commonwealth Financial Planning (CFPL) has been forced to stop charging fees for ongoing services and not enter any new ongoing service arrangements after failing to meet its obligations under an enforceable undertaking (EU), which commenced in April last year.
CFPL failed to provide the Australian Securities and Investments Commission (ASIC) with an attestation and with an acceptable Final Report from an independent expert, both of which were required under the EU.
On 31 January, Ernst & Young issued its second report under the EU, which identified further concerns regarding CFPL’s remediation program and its compliance systems and processes.
It said there remained a ‘heavy reliance’ on manual control, which ‘have a higher inherent risk of failure due to human error or being overidden’.
CBA’s accountable person also provided a written update to ASIC on the remediation program and work being done in relation to CFPL’s systems, process and controls, but given EY’s report, the corporate regulator did not consider the notification to meet its requirements under the EU for an acceptable attestation.
The requirement under the EU to stop charging or receiving ongoing fees was therefore triggered, and the regulator has since been informed by CFPL that it is now in the process of transitioning its ongoing service model to one where customers are only charged fees after the relevant services have been provided.