Commonwealth Bank of Australia (ASX: CBA) had released an update in regard to the “fees for no service” conduct, the inspection of which was carried out by Ernst & Young or EY. This update was related to the bank’s financial planning arm named: Commonwealth Financial Planning Limited or CFPL. EY was supposed to undertake the preparation of an independent expert report. This report needs to feature the contents related to the CFPL’s duties. Ernst & Young should have examined that whether or not appropriate steps have been taken into consideration for the customers who were supposed to get remediation between the period of July 1, 2015 to January 31, 2018 have actually got the remediation.
Another thing which EY was supposed to examine is that whether or not the company (CFPL) had proper processes, systems as well as controls to settle the obligations of their customers which have been giving away the service fees. Australian Securities and Investments Commission or ASIC would summarize the independent expert’s report which could help in the promotion of the public confidence as well as the integrity of the corporate governance and financial markets.
What were the findings of Ernst and Young?
Ernst and Young found that between July 1, 2015- May 31, 2016 and June 5, 2017- January 31, 2018, CFPL had adopted necessary steps in the interests of the customers and made sure that the remediation is provided to the customers which have charged fees for no service.
However, for the remaining period i.e. from June 1, 2016-June 4, 2017, CFPL had carried out lower customer testing and they were supposed to carry out further work. However, EY also stated that the company i.e. CFPL is now taking necessary steps to tap those customers which were supposed to get the remediation. EY stated that it would reassess the report for this period after CFPL adopts necessary steps.
Coming to CFPL’s another issue i.e. its control environment, EY stated that CFPL’s controls, processes as well as systems were adequate, and they are able to fulfill the obligations of the customers. However, after the assessment, EY stated that the company might go for further improvements in regard to its control processes. The scope for further improvements is required because of the increased reliance on the manual processes as well as their sustainability, lesser control awareness as well as the limitations of the company’s ability with respect to analyzing as well as report the information. In January 2019, EY would again be assessing that whether or not CFPL has taken actions on the findings of the EY.
However, CFPL has been seeking an extension till January 31, 2019 for Ernst and Young to come up with the final report. Moreover, the extension would also allow the company to adopt the necessary measures which are required to be undertaken for the period from June 1, 2016-June 4, 2017 as well as to work upon the EY’s recommendations to improve its systems, controls as well as processes.
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