Commonwealth Bank chief executive Matt Comyn apologised for the group's financial advice failures as two CBA planning subsidiaries entered an enforceable undertaking with ASIC - all before the financial services Royal Commission tackles advice on Monday.
Commonwealth Financial Planning and BW Financial Advice will pay a community benefit of $3 million as part of the EU. The advice firms' total compensation bill now sits at $88 million plus interest, which is being paid to 31,500 customers affected between July 2007 and June 2015.
ASIC found the advice firms failed to provide, or failed to locate evidence regarding the provision of, annual reviews to the customers.
Apart from the latest $3 million payment, the law enforcement agency has set out several other conditions of which Commonwealth Financial Planning must comply. BW Financial Advice ceased trading in October 2016.
In a public statement, CBA said that in 2014 it identified and self-reported to ASIC that some CFPL and BWFA customers did not receive an annual review as part of the financial advice service package they paid for.
CBA then worked with independent experts, Deloitte and EY, to develop and implement a comprehensive Advice Fee Refund program covering the period 2007 to 2015, which involved reviewing about 62,000 customer files.
CBA chief executive Matt Comyn said: "We recognise the fact that we have failed customers in our advice businesses over the past decade. These failures have resulted in a range of regulatory actions including imposition of licence conditions and remediation programs. "
"This is unacceptable and we owe our customers an apology for letting them down. Providing quality financial advice is critical for our customers.
"Next week the Royal Commission will hear more about issues in financial advice where we have failed our customers and we need to listen and learn from what we hear."
CBA has engaged EY to independently verify its current service delivery processes meet the standards the community and regulators expect.
Following the review, CBA will provide a public update on the work completed to address the issues identified in its businesses.
Comyn will provide an update on the financial advice businesses later this year.
ASIC deputy chair Peter Kell said: "Our report into Fees For No Service in October 2016 identified the major financial institutions' systemic failures in this area, and called for fair compensation to be paid to customers who did not receive the advice reviews that they were promised and paid for."
"This enforceable undertaking follows on from the earlier enforceable undertaking accepted by ASIC in relation to ANZ's fees for no service conduct. These failures show that all too often the financial institutions prioritised revenue and fee generation over the delivery of advice and services paid for by their customers," he said.