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View of a branch of the Commonwealth Bank of Australia in Sydney, Australia, April 18, 2018. REUTERS / Edgar SuReuters
SYDNEY (Reuters) – The Financial Planning Unit of the Commonwealth Bank of Australia ceases to charge service fees to its customers and will only charge them when services are rendered, following an order from the supervisory group of l & # 39; company.
Commonwealth Financial Planning Ltd (CFPL) has begun the process of ceasing to charge such service fees on existing customers as of February 1, said Monday the leading Australian lender in a statement.
Earlier in the day, the Australian Securities and Investment Commission (ASIC) had asked CFPL to stop taking fees because it had not complied with an order of the court fixing the charges wrongly levied.
The lender stated that CFPL also agreed to not enter into any new service contract with its customers.
The CBA anticipates that the changes will have an A $ 40 million impact on CFPL's pre-tax income.
"CFP will adopt a new model of financial advisory fees in which customers will pay for consulting services when they are delivered," said Angus Sullivan, Commonwealth Bank Group's chief executive for retail banking.
The orders come at a time when the final report is being released by a powerful investigation that last year revealed systemic wrongdoing in the Australian financial sector.
Commonwealth Bank, which was criticized during the investigation for its fee structure and for charging fees to clients for financial advice they have never received, is considered particularly vulnerable to regulatory repression. because of the size of its retail operations.
ASIC said the bank's financial planning arm had not adequately responded to its concerns about its charges for any service, which triggered the restrictions.
The bank did not comment immediately when it was contacted by Reuters.
The "big four" banks – CBA, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank – and AMP have already pledged more than $ 2 billion ($ 1.45 billion) ) to their injured customers.
The new requirements would be maintained until CFPL is able to convince ASIC that all outstanding issues have been resolved.
"CFPL also informed ASIC that it was moving from its current service model to a model whereby customers only have to pay a fee after the corresponding services have been provided," the statement said. "ASIC will monitor the transition from CFPL to the new model."
CBA shares closed up 0.8%, while the general market strengthened 0.5%.
(Report by Wayne Cole and Tom Westbrook, additional report by Aditya Soni in Bengaluru, edited by Peter Cooney and Muralikumar Anantharaman)
Copyright 2019 Thomson Reuters.
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