CBA to refund dead customers charged with ‘unauthorised fees’

By @chelean on
FILE PHOTO: A Commonwealth Bank logo adorns an Automatic Tellar Machine (ATM) located in Sydney, Australia November 12, 2014.
FILE PHOTO: A Commonwealth Bank logo adorns an Automatic Tellar Machine (ATM) located in Sydney, Australia November 12, 2014. Reuter/David Gray/File Photo

The Commonwealth Bank of Australia will be refunding customers who were charged fees for no service. The CBA came under fire earlier this year after the Royal Commission raised issues that it was charging dead client fees.

On Tuesday, the bank announced that it would launch a remediation program to pay back “unauthorised advice fees” it charged to dead customers in the past seven years. It said it was still investigating, although its initial search of 142,000 accounts identified 12 deceased estates being charged unauthorised fees between April and June 2018.

The initiatives include the rebating of grandfathered commissions of Commonwealth Financial Planning (CFP) customers, and a review and remediation program of the unauthorised charges to deceased estates.

CBA will also remove certain fees on legacy wealth products from January 2019. This is expected to save customers approximately $25 million per year. It will rebate all grandfathered commissions to CFP customers also from January, which will benefit about 50,000 customers accounts by approximately $20 million annually. For CFP customers, it will provide them with an option to renew their ongoing service arrangements every two years.

“The changes announced today continue the process of reform underway in our wealth management businesses and form part of our response to specific issues identified this year through the Royal Commission,” CBA Wealth Management COO Michael Venter said.

“Charging unauthorised advice fees to deceased estates is unacceptable. A broader review of deceased estates is underway across our advice licensees. It will go back seven years to ensure that any instances where unauthorised fees have been charged are identified and refunded with interest.”

CBA said it has already paid about $270 million in compensation including interest to customers provided with poor quality advice or charged fees for services that were not provided.

In April, the Royal Commission was told that Commonwealth Bank customers were charged with fees for financial advice that they did not receive. Advisers at the bank also continued to hit dead customers fees even though they were aware that they were deceased.

ANZ and Westpac have previously vowed to end grandfathered commissions.

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