ASIC orders extra CBA client reviews

Last year, the regulator appointed KordaMentha Forensic to examine the steps taken by Commonwealth Financial Planning (CFPL) and Financial Wisdom (FWL) in 2012 to identify any clients who received poor advice from "high-risk advisers".

KordaMentha's second report, which ASIC released today, states that the groups took reasonable steps to identify which clients of a group of former advisers should have been included in a compensation program.

It also states that CFPL and FWL took reasonable steps to identify other potentially high-risk advisers.

However, KordaMentha found that the groups did not have a reasonable basis for the process they used to determine whether a group of the potentially high-risk advisers should have been included in a compensation program.

"As a result of KordaMentha Forensic's finding, CFPL and FWL are required to review client files of 17 advisers to determine whether the advisers should be included in a compensation program," ASIC said.

"If any of those clients are found to have lost money as a result of bad advice, they will be compensated in a process overseen by KordaMentha Forensic."

CBA group executive of wealth management Annabel Spring said, "We are committed to doing the right thing for our customers. This report provides another layer of assurance and demonstrates how much we have done and continue to do to identify any past issues and put them right.

"We will now work with ASIC and KordaMentha Forensic to complete the further reviews. If any customer received poor advice that resulted in financial loss, we apologise and will compensate them."

KordaMentha Forensic's third report, the 'compliance report', will be released in 2016 on its audit of whether CFPL and FWL have complied with their additional AFSL conditions.

This includes the implementation of an advice review and client compensation activities following KordaMentha Forensic's first two reports.

The first KordaMentha report was released in April 2015 and found "deficiencies" in the bank's original $52 million client compensation project.