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Monday 5 December 2016

16-415MR Update on licence conditions of two CBA financial advice businesses: ASIC releases compliance report from KordaMentha Forensic

ASIC has released the findings of a report by KordaMentha Forensic assessing the steps taken by Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL) to communicate with and compensate customers of 15 former advisers for advice they provided between 2003 and 2012.

This report was required under additional conditions imposed by ASIC, with consent, on the Australian financial services (AFS) licences of CFPL and FWL in August 2014 (refer 14-104MR and 14-192MR).

The report finds that in most instances, the licensees have complied with their licence obligations to consistently apply a remediation program to customers of the 15 advisers.

However, in some instances, the licensees failed to meet the time-frames specified in the additional licence conditions. In those instances, the licensees failed, within the required time-frames, to communicate with customers or provide them and their independent advisers with relevant information to help them to assess their advice or compensation. The licensees subsequently rectified these deficiencies by providing the information to the clients and advisers. ASIC does not propose taking any further action.

Table 1 provides a summary of KordaMentha Forensic's findings.

The report also provides an update on compensation outcomes arising from the additional licence conditions. To date, the additional licence conditions have resulted in a further $4.96 million being offered to 185 customers of the 15 advisers. This is in addition to the $26.97 million paid to 707 customers of the same 15 advisers under a previous compensation program. For further information about that compensation program, see KordaMentha Forensic's Comparison Report, published in April 2015 (refer 15-083MR).

KordaMentha Forensic's next report regarding the licensees' current review of advice given in 2012 and earlier by 17 further potentially high-risk advisers, including any further compensation outcomes, will be published by ASIC in 2017.

Table 1: Summary of compliance

Licence conditionCompliance
Condition 24 – Reasonable access for Compliance Expert Yes
Condition 25 – Written communications with the 4,333 Cases (by 22 May   2015, unless otherwise agreed with ASIC) 99.95%
Condition 26 – Provision of information to Independent Advisor where   requested – Timing requirement (provided to clients within 14 days) 98.10%
Condition 26 – Provision of information to Independent Advisor where   requested – Reasonably sufficient information requirement Yes

Condition 27 – Further Licensee Review (completed within 90 days of   client request)

92.5%

Condition 28 – Further Licensee Review outcome letter (completed within   30 days of completion of Condition 27)

97.5%

Condition 30 – Licensee status reports to ASIC

Yes

Condition 31 – Inclusion on CBA Board meeting agenda

Yes

Source: KordaMentha Forensic, Compliance Report (Parts 1 and 2), 30 November 2016

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Note for  media:

The compensation outcomes described in this media release are separate to:

  • compensation for advice 'fee for no service' failures described in Report 499 Financial advice: Fees for no service (refer: 16-365MR), and
  • compensation paid under CBA's separate Open Advice Review program.

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Last updated: 05/12/2016 12:18