Less than $80,000 in compensation has been paid to date by the Commonwealth Bank to clients who have registered for the group’s Open Advice Review Program (OARP), a new report has shown.
Promontory Financial Group, the Independent Expert appointed to the OARP to oversee CBA’s review of advice clients, has delivered its second report on the program. The report provides an update on the progress that has been made in assessing cases in the OARP, with a particular focus on the cases that were assessed as part of the CBA’s pilot program.
The Bank commenced a pilot program in November 2014 to test and refine the assessment processes of the OARP, prior to full implementation. 60 cases were reviewed as part of the pilot, and each customer was represented by an Independent Customer Advocate.
Of those 60 cases, just two clients have received compensation, totalling $49,702. 11 cases were identified as having been impacted by poor advice. However, despite CBA offering a total of $216,611 to these clients, only two clients have received their compensation. The report showed that a further $98,204 in offered compensation had been accepted by customers, but had not yet been paid by the Bank (as at 30 April, the end of the period of reporting by Promontory).
Two more cases in the pilot were assessed as having received poor advice, but no compensation was offered due to the Bank’s assessment that no financial loss was suffered by the customer as a result of the advice. The remaining pilot cases were assessed by the Bank as having received appropriate advice.
…the Bank has made total compensation payments of $79,702
CBA subsequently began its formal assessment of the more than 22,000 cases lodged with the OARP, the report observed. According to Promontory, CBA has issued assessment outcomes for 208 cases since the commencement of the OARP (including the pilot cases). 28 of these cases have been offered compensation, representing 13% of cases assessed to date and a total compensation offer of $562,513. Of this amount, the Bank has made total compensation payments of $79,702.
The cases in which compensation was offered were assessed by the Bank to have involved poor advice, incorrect implementation of advice, or incorrect fees that resulted in financial loss for the customer. Five of the customers offered compensation have accepted the Bank’s terms. Four have rejected the offer and pursued a counter-offer, and the remaining 19 cases are still under review by the customers involved.
In addition to its review of the cases assessed as part of the OARP, Promontory also reported on the issues experienced by CBA in retrieving customer files. According to Promontory, while the Bank has made refinements to improve the efficiency of file retrievals, it will continue to manage a number of challenges associated with the cataloguing of all Commonwealth Financial Planning customer files, including:
- Difficulties in confirming whether a customer’s advice files are complete, given that files could be distributed across many locations
- The potential for some older customer advice files to have been destroyed, in accordance with the Bank’s document retention policies and regulatory guidelines
- Poor record management in some of the Bank’s document archiving facilities
- Logistical challenges regarding document storage at various locations where the Bank’s file retrieval team are located, given the large volume of files collated
- Incomplete data capture for some original files, such as cases where the name of each adviser who provided advice to the customer during the Review Period is not stated
The CBA noted the release of the Report, saying it acknowledged the Bank’s ongoing efforts to provide fair and consistent outcomes for customers by ensuring appropriate governance, systems and processes are in place.
