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Commonwealth Bank to refund customers $700 million

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(Source: Getty, AAP)
(Source: Getty, AAP)

The Commonwealth Bank of Australia has set aside an additional $300 million for its customer remediation budget.

This adds to the $534 million of provisions the bank has already set aside to pay back customers for unlawful financial advice uncovered during the Banking Royal Commission, such as charging fees for no service or providing inappropriate financial advice.

This brings the total sum to $834 million.

Of the $834 million, $698 million will go to customer refunds, including $280 million in interest, while $136 million will go to program costs, according to a CBA statement released to the ASX.

The money is being provided to financial advice businesses CBA used to own, including Count Financial, Financial Wisdom and Commonwealth Financial Planning.

CBA sold off its wealth arm Count Financial Limited to CountPlus for $2.5 million in mid-June last year.

The provisions are made in order to cover the conduct of CBA-related advisers during the time it owned the businesses.

“CBA has reviewed its estimates in relation to ongoing service fee customer remediation and associated program costs. This resulted in a net increase in provisions of $300 million,” the bank said in a statement.

CountPlus has welcomed CBA’s extra provisioning, and flagged that additional funds may be provided in the future.

“The potential for further increases to the indemnity limit remains under certain triggers relating to the failure rate for fee for no services and the inappropriate advice,” said a CountPlus statement released this morning.

“Remediation amounts will not be known until individual cases have been reviewed and compensation offers made.”

The statement by CBA said: “While these additional provisions are estimates that may change, CBA believes it has adequately provided for these issues. CBA will continue to monitor the adequacy of these provisions.”

CBA declined to comment when Yahoo Finance reached out.

The additional $300 million comes as CBA is two weeks away from releasing its full-year earnings results.

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