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Friday 8 August 2014

14-192MR ASIC imposes new AFS licence condition on two Commonwealth Bank financial planning businesses

New conditions on the Australian financial services (AFS) licences of two of Commonwealth Bank of Australia (CBA)’s financial planning arms, Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL), have been finalised. The AFS licensees have consented to these conditions.

ASIC took this action after CBA informed ASIC that the original process developed to compensate customers of former CFPL advisers was not applied consistently across all impacted customers of the two businesses. This inconsistency disadvantaged some customers (refer: 14-104MR).

The conditions are designed to ensure that the customers whose advice was reviewed by the AFS licensees under a past remediation program are:

  • contacted by the relevant AFS licensee with an assessment of the advice they received and an offer of a further review
  • offered up to $5,000 to assist with obtaining their own financial or legal advice to assess the original review of their advice and any compensation offer, and
  • given the ability to have their matter assessed by the Financial Ombudsman Scheme (FOS), with both AFS licensees agreeing to waive any limitation period or claim threshold that would normally apply to FOS matters.

ASIC will appoint an external compliance expert to oversee the AFS licensees’ compliance with the conditions. The expert will also review whether the steps taken by the AFS licensees to identify both the advisers and the clients that were covered by the compensation program were reasonable. The AFS licensees will be required to address any deficiencies identified by that review.

ASIC Chairman Greg Medcraft said, ‘These conditions and their oversight by an ASIC-appointed expert provide confidence that relevant customers who received poor advice will be appropriately compensated, and that if the AFS licensees' processes for identifying deficient advice and affected customers were not adequate, that corrective measures are taken.’

These AFS licence conditions are separate to CBA’s expansion of its remediation program of financial advice customers, announced in July 2014. However, clients covered by the AFS licence conditions may, if they wish, also have their case assessed under that program in addition to, or instead of, the process in the conditions.

 

Background

The new AFS licence conditions can be read below or obtained from the AFS licensees.

AFS licence holders that do not comply with the conditions of their AFS licence could face suspension or cancellation of their AFS licence.

Download:

Commonwealth Financial Planning Limited: Additional AFS licence conditions (PDF 46 KB)

Financial Wisdom Limited: Additional AFS licence conditions (PDF 46 KB)

Editor's note:

Following the publication of this media release and the updating of the licensees' AFS licence certificates, the numbering of the additional licence conditions changed. As a result, condition 22 in the attached document is numbered as condition 23 in the actual licence certificate, condition 23 in the attached document is numbered as condition 24 in the actual AFS licence certificate, and so on.

Last updated: 31/03/2015 12:00