January 23, 2018
The Commonwealth Bank (CBA) may be required to pay further compensation for the actions of its financial advisers after it was discovered that five advisers were not adequately reviewed to determine whether their clients should be included in a compensation program.
The five advisers were part of a group of 16 advisers who were identified as potentially high-risk advisers in 2012, but were not adequately reviewed at the time by the bank, according to a statement released by ASIC.
Under the additional licence conditions imposed on Commonwealth Financial Planning and Financial Wisdom by ASIC, the CBA’s review program was examined by KordaMentha Forensic which found the 16 advisers should have had their advice reviewed.
After further examination of the adviser’s client files, it was determined all of the customers of the five advisers should be reviewed in the compensation program and that no further review was required for the other 11 advisers.
As a result of this decision, CBA has been required to review all advice given to customers of the five former representatives, and has reported to ASIC that approximately $1.9 million of compensation was due to customers of the five advisers, as of 10 January 2018.
ASIC stated this sum was likely to increase as CBA reviewed further customer files. The bank had recently written to more than 3,500 customers of the five advisers, notifying them of the advice review, and has issued assessment outcome letters to more than 1,000 customers.
The regulator added the CBA would continue to issue assessment outcome letters and compensation offers to affected customers until 31 March 2018.