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ASIC update on CBA compensation

Tuesday 30 January 2018

As part of their progress on a compensation scheme, Commonwealth Bank of Australia (CBA) will review advice given to customers by five advisers and pay compensation where customers have suffered a loss.

According to an ASIC report, CBA owes $1.9 million in compensation as a result of advice given by the five in question. However, the regulator suggests that, as the reviews continue, that compensation figure is likely to increase.

In 2014, the regulator put licensing conditions on Australian Financial Services Licenses (AFSL), Commonwealth Financial Planning and Financial Wisdom.

It was then determined that the licensees to took adequate steps to assess their 16 advisers; however, reasonable steps were not taken to assess whether their clients should have been included in the assessment.

“CBA recently wrote to over 3,500 customers of the five advisers, informing them their advice was being reviewed. Following completed reviews, CBA has issued assessment outcome letters to over 1,000 customers. CBA will continue to issue assessment outcome letters and compensation offers to affected customers between now and 31 March 2018,” the regulator said.

The regulator also said it has also employed KordaMentha Forensic to complete a compliance review under the additional licence conditions under which the current review is being carried through.
KordaMentha found there were sixteen potentially ‘high-risk advisers’ but has indicated they have ‘reviewed and are satisfied’ with the process CBA has used.

“The current round of compensation is in addition to $4.97 million including interest already offered to customers of different advisers under the additional licence conditions compensation scheme, as reported in KordaMentha's December 2016 compliance report,” ASIC said.