The Commonwealth Bank has admitted one of its advice subsidiaries charged ongoing service fees to clients it knew had passed away. Providing testimony to the Royal Commission today, CBA executive general manager, Commonwealth Private Marianne Perkovic acknowledged that on at least three separate occasions authorised representatives of Count Financial were identified in 2015 for continuing to charge ongoing service fees to clients that had died.
Referring to a document from a December 2015 CBA risk and compliance committee meeting, Senior Counsel Assisting Michael Hodge told the Commission of an instance in which service fees were charged to a client that passed away in 2007 by a Count representative and no contact was made with the client's widow until 2013, with still no action taken.
According to the document, the risk and compliance committee simply recommended a formal warning be issued to the adviser.
On another occasion, "a different adviser provided advice in 2003 to a client who passed away the following year. The adviser was aware the client had died but continued to charge the ongoing service fees. When asked, he said he didn't know what to do, had tried to contact the public trustee and not heard back," Hodge said.
In this instance, the committee determined that a possible warning would be issued, depending on the outcome of deeper investigation.
At the same meeting, the committee was made aware of another adviser receiving ongoing service fees from a client that had passed away. He had provided no advice to the client nor her estate and did not have an ongoing service agreement with the estate.
"On this occasion, it doesn't appear that there is a discussion about even issuing a warning to the adviser," Hodge said.
Perkovic responded: "That would have been updated. A warning might have come later."
Hodge also detailed further instances of fees for no service at Count, including one instance of an adviser charging ongoing service fees despite not providing any advice to any clients.
"This is the document from one risk and compliance committee forum. How many Count advisers would need to not be providing ongoing services before it was considered a systemic issue?" Hodge asked.
"It would need to be determined through the [separate] significant breach panel," Perkovic replied.
This is despite Hodge having previously provided an example of an adviser with a low rating that did not conduct reviews for ongoing clients being identified in August 2015. An update in October 2015 reflected a recommendation that a warning letter be issued as it occurred on at least "four instances and systemic issues were identified."
When Hodge asked Perkovic if this was the type of issue that would be presented to the significant breach panel for reporting to ASIC, she said it would depend on the issue and whether it was "determined to be serious enough to warrant the breach panel process."This article was first published by http://www.financialstandard.com.au
Author: JAMIE WILLIAMSON