Commonwealth Bank of Australia (ASX: CBA) has revealed a plan this morning to fix its financial advice issues.
Commonwealth Bank of Australia is Australia’s biggest business and it has been under the spotlight in the Royal Commission for its part in the financial advice scandal, particularly the revelation it was charging deceased clients.
CBA’s plan:
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The bank is going to review advice fees charged to deceased estates throughout its advice licencee network and refund (with interest) times where “unauthorised” fees have been charged to the customer.
Next, the bank will remove “certain” fees on legacy wealth products starting in January 2019, which will apparently save customers around $25 million per year.
Commonwealth Bank also said it will refund all grandfathered commissions to Commonwealth Financial Planning
(CFP) customers from January 2019, which will affect 50,000 customers and cost $20 million per year.
The final initiative is providing all CFP customers with an option to renew their ongoing service arrangements every two years.
According to Commonwealth Bank, it has paid approximately $270 million, plus interest, so far in compensation for poor quality advice or where services weren’t provided.
CBA Wealth Management Chief Operating Officer, Micheal Venter, said:
“The changes announced today continue the process of reform underway in our wealth management businesses and form part of our response to specific issues identified this year through the Royal Commission.”
One of the other main actions that Commonwealth Bank is taking is selling its wealth management (CFSGAM) and mortgage broking businesses., which could be valued at up to $8 billion.
The Commonwealth Bank of Australia share price is down around 10% over the past year according to Google Finance.
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