CFS to strengthen licensee monitoring after royal commission

Under cross-examination at the royal commission hearings today, Ms Elkins, who is executive general manager of the bank’s CFS wealth subsidiary, was asked about the relationship between CFS and licensees who use its platform, including those owned by CBA.

Asked whether CFS has measures in place to ensure advisers and licensees using its platforms adhere to the FOFA requirement to distribute fee disclosure statements (FDSs), Ms Elkins explained that it is normal practice for the licensee to hold liability for this under “dealer terms of trade”, echoing similar testimony offered by AMP’s John Keating this morning.

Pressed further about this arrangement and why CFS does not take steps to ensure compliance with the FDS obligation, Ms Elkins revealed the company will consider changing its policy.

“You could require, couldn’t you, dealer groups to confirm in respect of each client that they have fulfilled their obligation in respect of fee disclosure statements,” asked counsel assisting Mark Costello. “[Are there] steps you could add, is there any current plan to add [steps]?”

Ms Elkins responded: “To be honest, I think through the course of the commission this week, there has been… It will be something that I will be going back to the office and doing, yes.”

She went on to admit that the way CFS “administers the dealer terms of trade” could be strengthened, adding that the business is “continually looking for ways to do things better.”

The announcement followed a heated exchange from commissioner Kenneth Hayne, who asked Ms Elkins why it did not consider ending the relationship with CBA licensees when compliance breaches were confirmed during the Commonwealth Financial Planning scandal.

CFS hasn’t faced a situation where it seriously considered terminating its relationship with a CBA licensee, Ms Elkins said.

'I think that's the point," commissioner Hayne responded.

The cross-examination of CBA executives is currently underway. Follow live at https://www.ifa.com.au/strategy/25404-royal-commission-financial-advice-hearings-live-blog