Bank’s compo bill keeps on growing

THE Commonwealth Bank has tipped more cash into the pot it has set aside to cover the bill for the scandals that have engulfed the group.

In a statement to the Australian Securities Exchange late yesterday, Australia’s biggest bank announced it was setting aside hundreds of millions of dollars more.

The new provisions span several business units, including those slated to be spun off, such as financial planning and mortgage broking. In a sign that repayments to customers ripped off or short-changed by banks are set to balloon after the financial services royal commission, much of the provisions announced by the CBA yesterday are to cover potential compensation costs.

The bank will allow an extra $200 million for potential remediation costs at the wealth management and mortgage broking businesses it is selling off.

It is setting aside a further $100 million to cover “the higher than expected total cost” of its ongoing customer refund schemes and programs to better comply with the law.

The CBA said it was also making an extra $55 million provision for costs associated with its agreement to sell the CommInsure Life insurance business to Hong Kong’s AIA Group, after the date for the deal to wrapped up was pushed back into next year.

Offsetting the extra costs announced yesterday, the CBA said it would recover $135 million after making claims on its professional indemnity insurance. It said those “insurance recoveries” related to the civil penalty and legal costs it had forked out during the year to June.

All the provision amounts announced yesterday are pretax figures and add to earlier sums flagged by the CBA, including $270 million in provisions announced by the bank in October to cover repayments to customers who received poor advice or were charged fees for advice they never received.