In 2014, ASIC had imposed AFSL conditions on Commonwealth Financial Planning and Financial Wisdom Limited that required the licensees to communicate with and compensate the customers of 15 former financial advisers for advice provided between 2003 and 2012.
The licence conditions were imposed after CBA informed ASIC that there were inconsistencies with the implementation of an initial customer compensation process.
Yesterday, the regulator released an update on the dealer groups’ compliance with the licence conditions, which shows that further compensation has been offered to 185 cases as a result of ASIC’s action.
According to the report, conducted by KordaMentha Forensic, a further $4.9 million has been offered in addition to the $26.97 million paid to 707 customers of the same 15 advisers under a previous compensation scheme.
In 51 of those cases, the licensees had initially deemed that the adviser had provided appropriate advice.
“However, as a result of reassessment using the documents that were available, the licensees have now determined that inappropriate advice was provided which led to these cases suffering a loss,” the report states.
In 12 cases, the licensees had initially assessed that no advice had been provided. However, the licensees have now determined that inappropriate advice was provided to four of these 12 cases, the report states.
Another two cases had initially received compensation for inappropriate advice, but as a result of the reassessment, the licensees determined further compensation was payable. Meanwhile, seven cases did not receive compensation after originally being assessed as not having suffered any loss because the client’s investments had outperformed the reference portfolio.
Following a request for a reassessment, “the licensees determined that the cases had now suffered a loss,” the report states.
The report also revealed that the licensees have complied in most instances with their licence obligations. They did, however, fail in a few instances to meet the specified time-frames.
When it came to completing further review in 90 days of a client request, the licensees achieved this in 92.5 per cent of the cases. In 97.5 per cent of cases, the licensees were able to complete a further review outcome letter within 30 days, the report shows.
“In those instances, the licensees failed, within the required time-frames, to communicate with customers or provide them and their independent advisers with relevant information to help them to assess their advice or compensation,” ASIC said.
“The licensees subsequently rectified these deficiencies by providing the information to the clients and advisers. ASIC does not propose taking any further action.”
