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Australia's Commonwealth Bank tells inquiry of more fees charged to the dead, weak controls
[SYDNEY] Commonwealth Bank of Australia (CBA) charged some estates of dead people for superannuation advice and had inadequate compliance controls in its management of retirement funds, the country's inquiry into financial sector misconduct heard.
Among Australia's "Big Four" banks, CBA has taken the biggest reputational hit as the inquiry airs allegations of deception of regulators within the industry, as well as of bonuses for sales of inappropriate products and the charging of fees for no service.
Linda Elkins, executive general manager of CBA's funds management unit Colonial First State, told the Royal Commission its superannuation trustee discovered in 2015 that some estates of dead people were being charged fees but the firm had failed to respond adequately.
"Was a control ever put in place for the fees to stop after three months (after death)?" asked Michael Hodge, a barrister assisting the inquiry, referring to the bank's self-imposed target to manage the problem.
"No. There - there are - there was a - we can see that there was -that this was - you know there was an attempt if you like or some business rules around this but I don't believe they were effective," Ms Elkins said.
The revelation comes after CBA admitted in earlier Royal Commission hearings this year that it had wrongfully withdrawn fees from dead people's accounts and mistakenly double charged interest to thousands of business customers
Shares in CBA, which also went ex-dividend on Wednesday, fell 2.5 per cent.
Ms Elkins also told the inquiry the bank had rejected advice from the banking and superannuation regulator in 2014 to promptly transfer 60,000 members to low cost retirement funds due to operational risks.
A day earlier, the inquiry heard the bank failed to transfer 15,000 of those pension customers in breach of a law requiring it to do so.
This month, CBA posted its first profit fall in almost a decade due to mounting regulatory costs, including provisions to cover costs related to the year-long inquiry and penalties for breaches of anti-money laundering rules.
The Australian Prudential Regulation Authority (APRA) in May commissioned an inquiry into CBA's governance and culture.
Royal Commission is due to issue an interim report next month and a final report in February. The government will then decide which recommendations to take.