CBA $300m blowout

Bank’s compo repayment tops $800m

THE Commonwealth Bank’s expected bill to compensate customers who were provided with dodgy financial advice or charged fees inappropriately has blown out past $800m.

Australia’s biggest bank on Thursday announced it had set aside another $300m to cover remediation payments for customers affected by problems highlighted at the financial services royal commission. This included charging customers for services that were not provided — including at least one customer who had been dead for a decade — and providing inappropriate advice.

The provisions cover financial advice provided through CBA’s former “aligned” businesses, including Count Financial, Financial Wisdom and

CFP-Pathways.

In a statement to the Australian Securities Exchange on Thursday, the CBA announced it would book the extra $300m charge in its accounts for the second half of the financial year just finished.

It had already recorded provisions worth $534m during the first half of the 2020 financial year and is due to report its full-year results on 12 August.

The CBA has now put aside $834m to cover remediation for poor financial advice and fees that were levied for services that were not provided.

That pool comprises $698m in customer refunds, including $280m of interest payments, and $136m in costs.

The CBA, led by chief executive Matt Comyn, said it believed it had “adequately provided” for the issues but would continue to monitor the need for more remediation.

The bank also announced a number of accounting changes that would be reflected in its full-year results.

In a separate announcement, CountPlus, which acquired Count Financial from the CBA last October, said it welcomed the new provision.

As part of the sale, the CBA provided an indemnity of up to $200m to CountPlus to cover any historical problems with financial advice provided by Count Financial.

In December, CountPlus announced it had made a provision of $143.3m in relation to the issue. It now it expects this figure to be revised to $195m but said remediation would be subject to a review.