The Commonwealth Bank of Australia (CBA) was charging dead customers for financial advice, the banking royal commission heard yesterday.
The outrageous admission was heard on Thursday, after CBA was forced to answer to several instances in which advisers at subsidiary Count Financial (which CBA bought in 2011) were found guilty of billing a customer for ongoing financial management despite being aware they had passed away.
Unbelievably, a CBA client had died in 2007, and yet a Count Financial compliance and risk report from 2015 showed the man was still being charged fees at that point.
According to the report, as cited by Michael Hodge QC, the deceased’s wife was contacted in 2013 but the fees continued.
This was not a one-off. Another customer, who died in 2004, was still being billed 10 years later, and as Hodge told yesterday’s hearings, another adviser had been receiving fees despite offering no advice to anyone at all.
It is understood, Count Financial’s risk management meeting known as the “forum”, was made aware of the rorting on more than one occasion, and chose to recommend formal warnings.
CBA, meanwhile had been inundated with fee-for-no-service complaints going back as far as 2008, and only notified the Australian Securities and Investment Commission (ASIC) in 2014.
“Notwithstanding these complaints, Commonwealth Financial Planning Limited didn’t realise that it had a problem with charging fees for no service until it gave a breach notice in 2014?” Mr Hodge asked CBA executive Marianne Perkovic.
“We knew there were isolated complaints but not systemic to the nature until 2014,” Perkovic replied.
Hodge challenged that view, saying CBA had “received many complaints” by 2012.
Earlier, Hodge had described CBA as the “gold medallist” of the big five financial institutions, in terms of charging fees for no service.
CBA has now paid out around $120 million, including interest, for fleecing tens of thousands of its customers.
AMP: We charge clients for doing nothing.
CBA: Amateurs! We charge dead clients for doing nothing.#bankingRC
— steve taylor (@thatstevetaylor) April 19, 2018
It’s not just CBA, as AMP CEO resigns in disgrace
Australia’s largest wealth manager AMP has been found to have misled ASIC 20 times and interfered in the drafting of an independent expert report to cover up its own fee-for-no-service rort.
Chief executive Craig Meller has resigned with immediate effect. Not just because the buck stops with the CEO, but also because any reference to him had been scrubbed from the independent report, presumably to avoid drawing ASIC’s attention.
Breaking: AMP chief executive Craig Meller will step down immediately https://t.co/jx3fedgjs2
— The Sydney Morning Herald (@smh) April 19, 2018
Hodge explained that AMP was charging “orphaned” clients fees for up to 90 days after they’d stopped receiving the expert assistance.
“I thought I couldn’t be shocked, but I was wrong. I think all the misconduct that’s coming out from the royal commission demonstrates why the banks and others pushed so hard against it. It shows they’ve been having a lend of everybody, of their clients, of the government and of regulators,” said former Labor MP, Bernie Ripoll, who chaired an inquiry into the financial planning industry.
“It’s just appalling. It shows how badly trust is broken. It’s not as if we don’t have the laws in place. They just ignored the laws. I think it’s incumbent on our regulators to come down really hard on them. I think that’s what the community expects.”