As part of ongoing discussions with ASIC, CFP confirmed that it had made a range of improvements to its systems, processes and controls concerning the delivery of ongoing advice services. CFP also identified that further improvements to its model were required to satisfy the standards set out in the Enforceable Undertaking (EU) and informed ASIC of this.
Accordingly, from Friday 1 February 2019, CFP will not enter into any new ongoing service arrangements and has also commenced the process to stop charging ongoing service fees to existing customers until the conditions of the EU have been satisfied. CFP expects to have completed the stopping of charging ongoing service fees for the vast majority of customers by 1 April 2019. Existing financial planning customers will continue to have access to all services that usually form part of their service arrangements, including the offer of an annual review.
The estimated impact to CFP’s pre-tax profit as a result of these changes is approximately $40 million.
Commonwealth Bank Group Executive Retail Banking Services, Angus Sullivan said: “We accept the requirements ASIC included in the EU and we’ve taken immediate steps to comply with those requirements.
“We recognise the importance of customers getting quality financial advice. Beyond the terms of what is required for the EU, we are evolving the future approach for the delivery of advice. CFP will be moving to a new financial advice fee model where customers will pay for advice services when they are delivered. The details of this model are currently being worked through and further information will be communicated to customers when they are finalised,” Mr Sullivan said.
CBA entered into an Enforceable Undertaking with ASIC in April 2018 and agreed, among other things, to provide attestations by 31 January 2019 that:
- summarise the changes made to CFP’s compliance systems and processes;
- confirm CFP’s compliance systems and processes are reasonably adequate to track contractual ongoing service obligations; and
- confirm CFP has taken reasonable steps to identify and remediate its ongoing service customers for the period from July 2015 to January 2018.