August 8, 2019
Commonwealth Bank of Australia has confirmed it will begin the assisted closure of Financial Wisdom, intending to cease providing licensee services through Financial Wisdom by June 2020.
This decision follows the sale of Count Financial to CountPlus, which received approval from its shareholders this week, and the recent decision to allow Commonwealth Financial Planning Limited-Pathways advisers to transition to a self-licensing arrangement or move to another licensee.
The bank stated its decision to exit its remaining aligned advice businesses is in response to significant changes to the regulatory environment for financial advice following the Royal Commission and structural changes in the advice sector.
CBA confirmed it will support advisers through an orderly transition to alternative arrangements, including self-licensing or joining another licensee and will keep managing customer remediation arising from past issues at Financial Wisdom.
The estimated pre-tax costs of supporting the Financial Wisdom and CFP-Pathways businesses, their advisers and their customers through this transition, as well as other internal project costs, is approximately $26 million.
The bank stated the two businesses incurred a post-tax loss of approximately $11 million in FY19, excluding remediation provisions.
In other news from CBA, the bank has provided an update on the progress of its Prudential Inquiry Remedial Action Plan, releasing a fourth report from the Independent Reviewer which noted the ‘solid progress in executing a necessarily ambitious plan’ and that CBA remains ‘on-track’ to deliver the plan.
CBA confirmed that as of 30 June 2019, it has submitted on time to the Independent Reviewer all of the 75 milestones that were due. 65 milestones have been assessed as ‘complete and effective’ and the assessment of the remaining 10 by the Independent Reviewer is in progress.
Changes made include:
- Establishing Non-Financial Risk Committees (NFRCs) in each business and support unit
- Mirroring the approach taken in setting up the NFRC at the Executive Leadership Team level Creation of a new role, Chief Controls Officers, in each business and support unit to assist leaders in fulfilling both their risk accountabilities and to drive implementation of the plan
Commonwealth Bank CEO, Matt Comyn, says, “Momentum is being maintained and we remain on-track to deliver the plan in full.
“Leaders at CBA fully recognise and understand the importance of addressing the 156 milestones relating to 35 recommendations in the APRA report. With each of these progress reports we have listened and responded to the feedback, adapted our approach as required, and ensured that both the Board and Executive Leadership Team continue to play a strong and active role in overseeing the plan.”