Australian Shares, News

Commonwealth Bank of Australia Fined Over Advice Scandal

Commonwealth Bank of Australia (ASX: CBA) shares have hardly budged today despite Australia’s largest company being handed down a fine from ASIC.

Commonwealth Bank Fined

Having just got over its headache from a binge of money laundering allegations, and an impending Royal Commission into the banking and financial sector, Commonwealth Bank has been handed a $1.9 million fine from the Australian Securities and Investments Commission (ASIC).

According to ASIC, up to 3,500 customers had been affected by advice given by five former representatives of CBA, which will pay compensation to the people who suffered loss.

“Compensation is likely to increase as CBA reviews further customer files,” ASIC said.

Commonwealth Bank has written to the affected clients and begun issuing assessment outcome letters. “CBA will continue to issue assessment outcome letters and compensation offers to affected customers between now and 31 March 2018,” ASIC noted.

ASIC appointed KordaMentha Forensic to investigate Commonwealth Financial Planning Ltd and Financial Wisdom Ltd. “KordaMentha determined that CBA should review advice given by 16 potentially high-risk advisers,” ASIC said.

The investigation then involved a review of six clients from each adviser. Of the five advisers who offered inappropriate advice, a full compensation program was recommended.

Royal Commission

Commonwealth Bank, Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) have been a focal point ahead of the Government’s Royal Commission.

The major banks, especially their financial advice arms, are far too often embroiled in scandals or allegations of misconduct. The Royal Commission will focus on the culture, misconduct and internal quality assurance systems used by financial services companies.

Given their poor track record, the big banks have been under pressure to divest their wealth management businesses. ANZ recently sold its advice business to IOOF Holdings Limited (ASX: IOF) for $1 billion, meanwhile, Westpac sold many of its shares in BT Investment Management Ltd (ASX: BTT).

Commonwealth Bank is also facing heat over claims it breached anti-money laundering rules. Commbank’s previous CEO Ian Narev was shown the door because of the money laundering saga.

Commonwealth Bank of Australia shares were trading 0.3% lower at $79 on Wednesday.

Our Most Popular Stories:

 

Disclaimer: This article contains general information only. It is no substitute for licensed financial advice. By using our website you agree to our Disclaimer & Terms of Use and Privacy Policy.

Related posts

WordPress Theme built by Shufflehound.

"I love reading disclaimers!" - Said no one ever

Welcome to Rask Media. Do yourself a favour and read this disclaimer: General Advice Warning & Performance WarningThis website contains general financial advice and information only. That means the advice and information does not take into account your objectives, financial situation or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. In addition, you should obtain and read the product disclosure statement (PDS) of the financial product before making a decision to acquire the financial product.Unfortunately, we cannot guarantee the accuracy of the information on this website, including financial, taxation and legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant or financial (tax) adviser.By continuing to use this website operated by The Rask Group Pty Ltd you agree to our Terms of ServicePrivacy Policy and Financial Services Guide. The Rask Group Pty Ltd is a Corporate Authorised Representative (No. 1264179)  of Strawman Pty Ltd (AFSL: 501 223).Please read our Code of Ethics or if you need help understanding these policies please use the “Contact Us” page to get in contact with us today.