CBA launches remediation

Bank to start refunding dead clients’ advice fees

COMMONWEALTH Bank is launching a remediation program for deceased estates after charging 12 accounts with unauthorised financial advice fees between April and June this year.

The lender identified the charges following an initial search of 142,000 accounts and has now widened the search to cover seven years of records across all its advice licensees.

CBA wealth management chief operating officer Michael Ventner said moves announced on Monday by the bank were a direct response to issues raised by the financial services royal commission, which heard instances of CBA advisers charging dead clients fees in 2015.

“Charging unauthorised advice fees to deceased estates is unacceptable,” Mr Ventner said in a statement.

The bank said it would forgo $ 45 million in annual income from January by rebating grandfathered financial planning commissions and cutting fees on legacy wealth products.

“We support the removal of grandfathered commissions from superannuation and investment products across the wider industry and believe a legislative approach should be considered,” Mr Ventner said.

CBA will rebate all grandfathered commissions to financial planning customers, benefiting about 50,000 customer accounts by approximately $ 20 million a year, and remove another $ 25 million in fees.

ANZ, National Australia Bank and Westpac have already said they will end grandfathered commissions on wealth products.

Commonwealth Bank has already paid approximately $ 270 million in compensation and interest to customers it provided with poor advice or charged fees for no service.

CBA shares had fallen 0.6 per cent to $ 68.75 by the close yesterday.

Westpac, NAB and ANZ also fell.

All four majors slumped on Monday after ANZ cut its profit forecast, sparking renewed worries over the possible extent of compensation banks will have to shell out to customers.