The Commonwealth Bank (CBA) has announced an increase to the limit of the indemnity provided to CountPlus to cover the remediation of past conduct from $300 million to $520 million.
CBA provided the indemnity to CountPlus to cover certain remediation costs that were identified at the time of the sale of Count Financial in 2019 and up to four years after.
“CBA is committed to comprehensively addressing the full range of remediation issues impacting customers of Aligned Advice businesses, including Count Financial Limited,” the bank said in a statement to the ASX on Thursday.
“The estimates of ongoing service fee customer remediation payments have been revised to reflect actual case assessments performed and remediation payments made, which has been recognised as a post-tax adjustment of $147 million to the Count divestment in 1H23.”
CountPlus acknowledged the increased limit in a separate statement and said that it expects CBA to “substantively complete” client assessments by the end of this year.
“CUP confirms the corresponding Count Financial remediation provision will be increased from $300 million to $520 million, subject to audit,” CountPlus said in a separate statement.
“The potential for further increases to the indemnity limit remains under certain defined remediation triggers and is not limited to fees for no service.”
In 2019, CBA sold Count Financial, with 160 practices and 359 advisers, to CountPlus and provided a $200 million indemnity while obliging itself to continue to manage a remediation programme for Count Financial customers affected by past issues.
The move was part of CBA’s effort to offload its advice businesses at the time, having already entered into an assisted closure agreement with Financial Wisdom and ceased CFP Pathways following the sale of Count Financial.
By mid-2020, CBA agreed to increase the indemnity to $300 million. A year later, CountPlus explained that “the potential for further increases to the indemnity limit remains under certain triggers relating to the failure rate for free for no service remediation and the quantum of certain inappropriate advice remediation.”
