This decision follows the sale of Count Financial Limited (Count Financial) to CountPlus Limited (CountPlus), which received approval from its shareholders this week, and the recent decision to allow Commonwealth Financial Planning Limited-Pathways (CFP-Pathways) advisers to transition to a self-licensing arrangement or move to another licensee.
The Bank’s decision to exit its remaining aligned advice businesses responds to significant changes to the regulatory environment for financial advice following the Royal Commission and structural changes in the advice sector.
Ceasing to provide licensee services through Financial Wisdom
CBA intends to cease providing licensee services through Financial Wisdom by June 2020 and will proceed with an assisted closure. CBA will support advisers through an orderly transition to alternative arrangements, including self-licensing or joining another licensee. CBA will also continue to manage customer remediation arising from past issues at Financial Wisdom. Customer remediation for Financial Wisdom was included in the additional provisions announced in the March quarter 2019 trading update.
CFP-Pathways advisers to transition to new licensee arrangements
The Group has decided to allow CFP-Pathways advisers to transition to self-licensing arrangements or move to another licensee.
The estimated pre-tax costs of supporting the Financial Wisdom and CFP-Pathways businesses, their advisers and their customers through this transition, as well as other internal project costs, is approximately $26 million.
From a financial perspective, the exit of Financial Wisdom and CFP-Pathways will result in CBA exiting businesses that, in FY19, excluding remediation provisions, incurred a post-tax loss of approximately $11 million.
Update on Count Financial sale
CBA today reconfirms that it expects to successfully complete the sale of Count Financial to CountPlus in October 2019 as originally advised in its announcement on 13 June 2019. Following completion of the transaction CBA, intends to sell its 35.9% shareholding in CountPlus in an orderly manner subject to market conditions.
Consistent with the announcement in March 2019, CBA remains committed to the orderly exit of its remaining wealth management and mortgage broking businesses, comprising Colonial First State, Aussie Home Loans and CBA’s 16% stake in Mortgage Choice. CBA is committed to the continued delivery of safe and affordable financial advice to Commonwealth Bank customers through Commonwealth Financial Planning.
CFP-Pathways is a business of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139 (Commonwealth Financial Planning). CFP-Pathways is comprised of self-employed advisers who run their own businesses and are authorised representatives of Commonwealth Financial Planning.