CBA (ASX: CBA) has revealed some more Hayne Royal Commission remediation charges in its upcoming FY20 result.
CBA is Australia’s biggest bank and one of the biggest companies on the ASX.
CBA’s latest remediation provisions
You may remember that a couple of years ago – what seems like a lifetime ago – that the big ASX banks were punished as a result of the Hayne Financial Services Royal Commission.
Banks have been remediating customers hundreds of millions of dollars for fees that shouldn’t have been charged, plus interest.
Today, CBA gave an update about additional customer remediation provisions that will impact the second half of FY20.
CBA said its addressing the full range of remediation issues impacting customers of aligned advice businesses including Count Financial (majority owned by Countplus Ltd (ASX: CUP), Financial Wisdom and Commonwealth Financial Planning.
The major bank said it’s going to recognise another $300 million of pre-tax customer remediation provisions. That brings the total to date to $834 million, which is $698 million in refunds (including $280 million of interest) and $136 million of program costs. The provision assumes an average refund rate of 37% of ongoing service fees collected between FY09 and FY19, excluding interest and 61% including interest.
Current CBA shareholders are paying for the poor behaviour of CBA over the past decade. I wouldn’t want to buy CBA shares with all of the uncertainty that’s going on at the moment due to COVID-19. For dividends I’d rather buy a quality dividend share.