A lot of effort for a modest outcome: CBA's financial advice compensation program

Close to 500 people at Commonwealth Bank are now working on sorting out the rights and wrongs of the bank's systematic misconduct in select financial planning matters.

A second report from independent expert Promontory Group, released on Friday, outlines the bank's progress to 30 April under its "Open Advice Review program".

CBA put the program in place last year "to identify and compensate for poor financial advice that may have been provided to customers of Commonwealth Financial Planning Limited and Financial Wisdom Limited between 1 September 2003 and 1 July 2012."

The number of customers compensated so far is in the dozens out of nearly 350,000 households contacted.

Out of an initial 22,000 customers that expressed an interest in a review, 7237 registered under the program. By the end of April, assessments had been made of 346 cases, and 208 of those progressed "through to consideration of assessment."

The bank "offered compensation to 28 of the 208 cases (13 per cent) that had been issued an assessment outcome as at 30 April 2015," Promontory said.

The cases in which compensation was offered "were assessed by the bank to have involved poor advice, incorrect implementation of advice, or incorrect fees that resulted in financial loss for the customer."


In 174 cases, the bank assessed the advice to be appropriate and consequently made no offer of compensation.

The remaining six cases were assessed by the bank as involving poor or incorrectly implemented advice, but this was assessed to have not resulted in the customer suffering financial loss. Therefore no offer of compensation was made.

Actual compensation paid to customers remains modest, at little more than A$560,000.

These costs must be dwarfed, however, by the outlay on staff and consultants, including Promontory.

Almost one per cent of Commonwealth Bank's 52,000 staff have been diverted to work on the remediation program.