Commonwealth Bank’s financial advisers have charged dead clients for financial advice – in one case for more than a decade – according to shocking evidence heard at the banking royal commission.
The commission was given evidence from a 2015 document for CBA’s Count Financial business that showed multiple examples of financial advisers charging ongoing service fees to clients who had died.
One adviser knew that a client had died in 2004 but continued to charge adviser service fees that kept being charged for a decade. The adviser was getting about $65 a month in fees in 2014 and 2015.
“When asked, he said he didn’t know what to do and he had tried to contact the public trustee and had not heard back,” the CBA document noted.
According to the CBA document, another customer of a different adviser had died in 2007 and contact was made with the client’s wife in 2013 but no action was taken to stop service fees being charged.
Another adviser was found to have been charging service fees for multiple clients with no evidence of ongoing services being provided. He also charged fees to a dead client.
“How many advisers within the Count network would need to not be providing ongoing services before it would be considered a systemic issue?” senior counsel assisting Michael Hodge asked.
Marianne Perkovic, the executive general manager of Private Bank at CBA, spent her second consecutive day in the witness box on Thursday and was immediately rebuked for failing to answer questions directly.
She admitted on Thursday that another CBA advice business, Commonwealth Financial Planning, was still receiving commissions from clients who entered into commission arrangements before 1 July 2013 when new Future of Financial Advice (Fofa) laws took effect.
Hodge wanted to know if CBA had considered removing those commissions.
“Has there been any consideration within Commonwealth Financial Planning Limited of dialling down those commissions to zero and only receiving fees where it provides services to customers?” he asked.
Perkovic replied: “No.”
Hodge asked: “Why not?”
Perkovic replied: “Well at the moment the grandfathering arrangements allow us some relief as fee-for-service fees increase. What we’re thinking of actually doing is looking at applying opt-in to clients before 2013 as a way for clients to understand their fees, because at the moment with opt-in that category of people don’t get the opportunity to opt-in.”
She said bank had been discussing it the last six months, but no action had been taken.
She added: “We haven’t made a decision, but we do think it’s an opportunity for the industry and a way that the industry also could possibly deal with the conflicted remuneration that we know is still not seen as positive in consumer groups.”
The commission also heard another CBA advice business, Commonwealth Financial Planning, had complaints from customers about fees for no service for six years before the bank made a formal notification about the problem to the corporate regulator in 2014.
On Wednesday the Commonwealth Bank admitted to being the worst financial services entity in Australia for charging customers fees for financial advice they never received.
Counsel assisting the royal commission, Mark Costello, on Wednesday asked Linda Elkins, from CBA’s wealth management arm Colonial First State, to confirm CBA’s poor record of charging fees for no service.
“It would be the gold medallist if [the corporate regulator] was handing out medals for fees for no service, wouldn’t it?” Costello asked.
Elkins replied: “Yes.”
