Tag: CBA

ASIC requires Commonwealth Financial Planning Limited to stop charging fees for ongoing services

ASIC says Commonwealth Financial Planning Limited (CFPL) has failed to provide ASIC with an attestation and with an acceptable Final Report from the independent expert, both of which were required under a Court Enforceable Undertaking (EU) entered into with ASIC in April 2018 in relation to CFPL’s fees for no service conduct.

As a result, CFPL is now required under the EU to immediately take all necessary steps to:

  • stop charging or receiving ongoing service fees from its customers; and
  • not enter into any new ongoing service arrangements with customers.

The EU, which commenced on 9 April 2018 and was varied on 20 December 2018, required CFPL to provide to ASIC by 31 January 2019:

  • a Final Report by the independent expert, Ernst & Young, on whether CFPL had taken reasonable steps to remediate customers impacted by CFPL’s fees for no service conduct and on the adequacy of CFPL’s systems, processes and controls; and
  • to provide an attestation from a Commonwealth Bank ‘accountable person’ under the Banking Executive Accountability Regime as to CFPL’s remediation program, and the adequacy of CFPL’s systems, processes and controls.

On 31 January 2019, Ernst & Young issued its second report under the EU, identifying further concerns regarding CFPL’s remediation program and its compliance systems and processes – including that there remains ‘a heavy reliance’on manual controls, which ‘have a higher inherent risk of failure due to human error or being overridden’.  Ernst & Young recommended CFPL address these issues within a further 120 days. 

On the same day, CBA’s accountable person provided a written update to ASIC on the remediation program and work being done in relation to CFPL’s systems, processes and controls. Having regard to the concerns raised by the independent expert and the contents of CBA’s written update, ASIC considered that the notification did not meet ASIC’s requirements under the EU for an acceptable attestation.

As a result, ASIC’s requirement under the EU that CFPL stop charging or receiving ongoing service fees and not enter into any new ongoing service arrangements, has been triggered. ASIC included this requirement in the EU to ensure that if CFPL were not able to satisfy ASIC that the fees for no service conduct would not be repeated, CFPL would have to stop charging ongoing service fees so as to significantly reduce any further risk to clients. Existing clients will continue to receive services under their ongoing service agreements but will not be charged by CFPL.

ASIC has received CFPL’s confirmation that it is complying with this requirement to stop entering into new ongoing service agreements and to cease charging existing clients fees under these agreements. This requirement will continue until CFPL is able to satisfy ASIC that all of the outstanding issues have been remedied. ASIC will be monitoring CFPL’s compliance with this obligation.

ASIC has also been informed by CFPL that it is now in the process of transitioning its ongoing service model to one whereby customers are only charged fees after the relevant services have been provided. ASIC will monitor CFPL’s transition to the new model.

Background

Under CFPL’s remediation program overseen by ASIC, CFPL has to date reported to ASIC that it has paid approximately $119 million to customers impacted by its fees for no service conduct.

CBA Will Offer Apple Pay

Despite the moves last year, CBA has now confirmed that from next year Apple Pay will be available to CBA customers.

CBA says “When Tap & Pay is turned on, you can make purchases up to $100 by tapping the back of your phone against a PayPass reader.  The transaction will work even if the phone is locked, turned off or if the battery has run out”.

This from IT Wire:

The Commonwealth Bank appears to have thrown in the towel as far as keeping Apple Pay out goes, and has said the payment option will be made available to its own customers and those of Bankwest.

In a statement issued on Friday, the bank said this move constituted part of its “commitment to becoming a better, simpler bank and providing the best digital banking experience for our customers”.

The CBA, along with Bendigo and Adelaide Bank, National Australia Bank and Westpac, attempted to cut a deal with Apple over Apple Pay, but the Australian Competition and Consumer Commission last year denied them the right to negotiate collectively.

Subsequently, Bendigo and Adelaide Bank quietly adopted Apple Pay.

ANZ was not part of this cartel, and has been offering Apple Pay since April 2016.

No mention was made of the tussle in Friday’s statement. Angus Sullivan, group executive of Retail Banking Services at CBA, said: “We recently wrote to our customers asking them what the bank could do differently and we received lots of excellent suggestions.

“One of the things we heard repeatedly from our customers is that they want Apple Pay and we’re delighted to be making it available in January 2019.

“We are committed to making changes that benefit our customers and simplify our business. We will continue to look for more opportunities to innovate and listen, to ensure our customers get the best experience when they bank with us. Responding to customer demand for Apple Pay underscores our commitment to becoming a better, simpler bank.

“Launching Apple Pay, alongside our No.1 rated CommBank app, will ensure our customers have the very best mobile banking experience.”

A survey conducted by analyst group Telsyte in February indicated the CBA customers were likely to switch banks if their existing bank did not provide their choice of payment mechanism.

When CBA was asked at the time about the reaction from customers, a spokesman told iTWire: “When customers consider who they want to bank with, they take into account a number of factors. A bank’s digital banking and payments offering is an important factor.

“Our award-winning CommBank app is the number one free banking app in Australia, with 4.8 million CommBank app users able to take advantage of its tools including Spend Tracker and PayID.”

Jennifer Bailey, Apple’s vice-president of Internet Services, said on Friday: “Apple Pay is the No.1 mobile contactless payment service worldwide and we are thrilled Commonwealth Bank customers will soon be able to benefit from a convenient and secure way to pay using the Apple devices they love or within their favourite apps or on the Web.”

It remains to be seen what Westpac and NAB will do with regards to Apple Pay. All four of the big banks offer Samsung Pay and NAB last month signed an agreement with Alipay to make the service available in 2019.


Broker Commission Stoush Continues

From Australian Broker.

The Mortgage & Finance Association of Australia (MFAA) has responded to the comments made by Commonwealth Bank of Australia (CBA) CEO Matt Comyn during yesterday’s Royal Commission hearings.

During the hearing, Comyn expressed his preference to scrap broker commissions and implement a fee for service. The MFAA has said it clearly demonstrates that CBA’s priority is shareholder returns.

MFAA CEO Mike Felton said the CBA’s position was not surprising, but was “entirely selfserving”, in that it is designed to destroy competition and reduce the bank’s reliance on the broker channel.

He said, “CBA’s model is anti-competitive and designed to drive consumers back into their branch network, which is the largest branch network of the major lenders.

“Mr Comyn’s solution for better customer outcomes is a new fee of several thousand dollars to be paid by consumers to CBA for the privilege of becoming a CBA customer.

“Cutting what brokers earn by two-thirds would save CBA $197 million, which is good for CBA’s shareholders. However, it would destroy competition, leaving millions of customers without access to credit outside of major lenders.

“In addition, as has been highlighted by both the Productivity Commission and Treasury, consumers are simply not willing to pay significant up-front fees for access to a home loan.”

Felton has also addressed Comyn’s recommendation to follow a model adopted in the Netherlands, under which consumers pay the same fee whether they use a broker or a branch, to ensure channel parity.

He said, “The proposal to adopt the Netherlands strategy is designed to maximise lender revenue. Under this model, broker customers pay the broker’s costs – instead of the bank – or branch customers pay a new fee that will substantially add to the bank’s revenue line and add thousands of dollars to the cost of getting a home loan from a lender directly.

“This is a fantastic win-win for CBA but a massive lose-lose for consumers regardless of whether or not they use a mortgage broker. CBA either acquires a new customer with zero acquisition cost, or it receives a new fee and massively decreased competition, so it can return to the days of four lenders in Australia. It’s a great deal for the bank.

“Any suggestion that this profit will be passed back to customers in the form of lower interest rates is fanciful.”

Felton also questioned the idea that brokers should earn the same as an in-house branch lender, whose overheads are paid by the bank.

He said, “Brokers are small business owners. They are not employees offering one product to customers. They pay rent, and staff, and electricity bills. They have to find every dollar they earn through servicing customers well and developing a strong reputation and referral network.”

The MFAA challenged the statements by CBA that brokers are causing systemic issues in the home lending market – and that it should be a lender who is tasked with ensuring good consumer outcomes for the entire Australian home lending market.

He said, “ASIC’s extensive, data-driven review of mortgage broker remuneration concluded that there was no finding of systemic harm caused by the broker channel,” Mr Felton said. “Additionally, as noted by Treasury in its background paper to the Royal Commission in July 2018: ‘Following a comprehensive report by ASIC in 2017 on mortgage broker remuneration, the industry is progressing reforms that could address the most significant misconduct with the current remuneration model’.”

“Frankly, we were surprised that it is being suggested that one of the major lenders should be tasked with reforming Australia’s home lending market, given the revelations of the past 12 months.

“The Productivity Commission found that: ‘Fixed fees paid by customers rather than commission structures have been proposed, and would eliminate conflicts, but the cost to competition would be high. Consumers would desert brokers, and smaller lenders (and regional communities with few or no bank branches) would suffer much more than larger lenders, if customers were required to pay for broker advice’.”

CBA Had Suggested Broker Fee For Service

Commonwealth Bank’s CEO Matt Comyn spent yesterday (19 November) in front of counsel assisting Rowena Orr QC, discussing many of the issues which came about in commissioner Kenneth Hayne’s interim report, via Australian Broker.

During the hearing Comyn said he supported a flat fee for service remuneration model for brokers and regulation change over trail commission.

He also said he had been in talks as far back as April 2017 considering making the change for CBA, but in the week before feared a “first mover disadvantage” if no one else made the same move.

Comyn was quizzed on research he had put forward to both the Sedgewick review and ASIC’s review into broker remuneration and said that brokers were “sensitive to where the commission structure is set”.

This was due to the findings of one report which suggested that broker flows to lenders increased with higher broker commissions. According to this evidence, one lender gained a 5.9% market share when they offered a limited time commission increase and then lost 5.1% when it stopped.

Orr went on to ask Comyn about emails sent to former CEO Ian Narev, where Comyn had suggested a fee for service model as seen in the Netherlands.

He said it would work the same in Australia, where to level the playing field and “preserve” mortgage brokers, banks would also need to offer a fee to customers for the execution of a mortgage.

He said, “I think it would put a material disadvantage to the brokers if customers paid a broker but they didn’t have to pay a similar amount to a financial institution. I think that would create a distortion.”

Comyn said CBA had been looking at moving to a flat fee model back in April 2017, but was concerned other institutions would not follow.

He said, “We were struggling or grappling with how to implement, and I’m sure we will return to it, we felt there was a genuine first mover disadvantage.

“We didn’t think it would be replicated, absent regulatory intervention. Therefore, we didn’t think we would improve customer outcomes because, effectively, no one else would change their model. We would just originate fewer loans through that channel.”

Confirming Comyn’s stance on the broker remuneration model Orr said, “So you would like to change to a flat fee model?”

Comyn said, “I can certainly see advantages in that model, yes. I would add that that view would not be supported by other participants in the industry but my personal…”

Interrupting, Orr said, “I am asking you about your view, Mr Comyn?”

Comyn replied, “Yes, that is my view.”

Orr said, “You would prefer to move to that sort of model?”

To which Comyn said, “Yes, I would.”

Looking specifically at trail commission, Orr asked Comyn about the services brokers continue to provide after the loan is complete if that was the argument for trail.

Commissioner Hayen interjected and asked if there were any ongoing services supplied by a mortgage broker.

Comyn replied, “I think they would be limited, Commissioner.”

When asked if that meant “limited or none”, Comyn said, “Much closer to none”.

When Orr asked Comyn if he thought trail commissions needed regulatory change, he said “Yes”.

The emails to Narev also discussed how much revenue the broker would lose on an average loan. The broker revenue on an average loan at the time of the email written was $6627 and would be expected to reduce to $2310, in line with the “acceptable band for the price of financial advice”.

CBA Stands Firm on Bonuses

On Monday (19 November), the seventh and final round of the royal commission hearings kicked off with CBA chief executive Matt Comyn being grilled over the group’s remuneration structures, via InvestorDaily.

Counsel assisting Rowena Orr questioned the major bank boss about frontline staff receiving ‘short-term variable remuneration’, or STVR.

“Short-term variable remuneration is what many people would think of as an annual bonus, is that right?” Ms Orr asked.

“Yes,” Mr Comyn confirmed. “We do not refer to it in that way, but it is a bonus.”

While he admitted that the bank has made a number of changes to its remuneration structure, including work towards the Sedgewick recommendations, Mr Comyn explained why CBA is standing firm on bonuses.

“We believe it is important to have an element of remuneration which is not fixed. We believe it is a well-designed set of metrics or a way for them to earn their short-term variable remuneration; it is both a way of eliciting discretionary effort and a way beyond termination as a form of consequences. It is also a way to make consequences clear to individuals,” he said.

After being prodded by Ms Orr for clarification, the CBA chief explained that “discretionary effort” is the difference between what staff might have otherwise have done if they were paid a fixed salary.

Ms Orr asked why staff can’t be motivated simply by being paid a fixed salary.

Mr Comyn used an offshore example to try and illustrate his response, alluding to a female employee at one financial institution in the United Kingdom that decided to stop paying bonuses.

“I’m talking specifically about a home lender. What they were in effect paid was 98.5 per cent of their prior year’s fixed remuneration and short-term variable reward. So they were guaranteed that remuneration,” he said.

“When I asked her what had changed, her answer was simply ‘I probably work 30 per cent less’. She was one of their best performing lenders.”

Mr Orr offered alternative ways of motivating staff instead of a bonus: “positive feedback for their performance; encouraging them to take pride in their work; encouraging them to have a sense of satisfaction in helping one of your customers; giving them additional responsibilities as a reward for performance; promotion; a higher base salary.”

Mr Comyn said all of these were appropriate ways of driving staff. However, he maintained that CBA has decided for now to continue using short-term variable rewards, or bonuses, to motivate fits sales force

CBA Takes A Margin Hit

CBA released their 1Q19 trading update today. Their unaudited statutory net profit was approximately $2.45bn in the quarter and unaudited cash net profit was approximately $2.50bn in the quarter, both rounded to the nearest $50 million. The cash basis is used by management to present a clear view of the Group’s operating results. CBA did not include any further customer remediation charges in the quarter.

Their operating Income up 1%, with higher other banking income offsetting flat net interest income. But the Group Net Interest Margin was lower in the quarter due to higher funding costs (including basis risk which arises from the spread between the 3 month bank bill swap rate and 3 month overnight index swap rate; and replicating portfolio) and home loan price competition.

Volume growth included 8.9% quarter annualised growth in household deposits. Home lending growth of 3.1% was below system growth of 3.6% (both quarter annualised). Business lending reflected continued portfolio optimisation in the institutional book.

Operating Expenses ex one-off items were down 1% due to timing of investment spend and software impairments in the comparative period.

Loan Impairment Expense (LIE) were $216 million in the quarter or 11bpts of GLAA and equated to 11 basis points of Gross Loans and Acceptances, compared to 15 basis points in FY18. Low corporate LIE reflected some single name improvements, sound portfolio credit quality and continued IB&M portfolio optimisation.

Consumer arrears were seasonally lower in the quarter. Whilst there was a moderate improvement in home loan arrears, some households continued to experience difficulties with rising essential costs and limited income growth.

Troublesome and impaired assets increased from $6.5 billion at June 2018 to $6.6 billion in September, driven by an increase in home loan impaired assets and a small number of individual corporate impairments.

Troublesome exposures were broadly stable in the quarter.

The Group adopted AASB 9 from 1 July 2018 resulting in a $1.06 billion increase to collective provisions and a 28 bpt increase in collective provision coverage to 1.03% (collective provisions to credit risk weighted assets).

Total Provisions were broadly stable in the quarter.

Customer deposit funding remained at 68%.

The average tenor of the long term wholesale funding portfolio at 5.0 years.

The Group issued $8.8 billion of long term funding in the quarter.

The Liquidity Coverage Ratio (LCR) was 133% at September 2018, up from 131% at June 2018.

The Net Stable Funding Ratio (NSFR) was 113% at September 2018, up from 112% at June 2018.

The Group’s Leverage Ratio remained relatively stable across the quarter at 5.5% on an APRA basis and 6.2% on an internationally comparable basis.

The Common Equity Tier 1 (CET1) APRA ratio was 10.0% as at 30 September 2018. After allowing for the impact of the implementation of AASB 9 and 15 on 1 July 2018, and the 2018 final dividend (which included the issuance of shares in respect of the Dividend Reinvestment Plan), CET1 increased 82 bptsin the quarter. This was driven by a combination of capital generated from earnings and the benefit from the sale of the Group’s New Zealand life insurance operations.

CBA has previously announced the divestment of a number of businesses as part of its strategy to build a simpler, better bank. These divestments are subject to various conditions, regulatory approvals and timings, and include the sale of the bank’s global asset management business, Colonial First State Global Asset Management (CFSGAM, expected completion mid calendar year 2019) and the sales of its Australian life insurance business (“CommInsureLife”), its non-controlling investment in BoCommLife and its 80% interest in the Indonesian life insurance business, PT Commonwealth Life (all expected to complete in the first half of calendar year 2019). Collectively, these divestments will provide an uplift to CET1 of approximately 120 bpts, resulting in a 30 September 2018 pro-forma CET1 ratio of 11.2%.

In June 2018, CBA announced its commitment to the demerger of NewCo, which includes Colonial First State, Count Financial, Financial Wisdom, Aussie Home Loans and CBA’s minority shareholdings in ASX-listed companies CountPlusand Mortgage Choice. The demerger process is expected to be completed by late calendar year 2019, subject to shareholder and regulatory approvals. CFSGAM will no longer form part of NewCo, following the recent announcement of an agreement to sell this business to Mitsubishi UFJ Trust and Banking Corporation.

 

CBA announces joint PEXA acquisition

PEXA, Australia’s online property exchange, which assists members such as lawyer, conveyancers and financial institutions to lodge documents with Land Registries and complete financial settlements electronically, has been acquired by via a joint bid from Link Administration Holdings Limited, Morgan Stanley Infrastructure Partners and  Commonwealth Bank (who is already a key stakeholder in the venture).

States across Australia have been moving across to the platform as the country aims for loans to become 100% digital.

CBA chief executive officer Matt Comyn said, “Having been a key stakeholder in PEXA since its inception in 2011, today’s announcement represents our continued commitment to support the property industry as it transitions towards an innovative, fully digital, settlements process that aims to provide improved experiences for customers.”

CBA also said the transaction aligns with its strategy to focus on its core banking businesses and to create a simpler, better bank for our customers. As part of the transaction, which is subject to a number of conditions precedent, CBA will invest a further $50 million, totalling approximately $100 million invested in PEXA to date. This will result in an increase in our ownership stake from 13.1% to approximately 16%.

No one seems to have noticed that one of the largest mortgage lenders is now also has a significant interest in the property settlement and transfer system – what could possibly go wrong?

MLC sale ‘complicated and messy’

NAB says all options are still on the table for the sale of its wealth business after rival CBA secured a buyer for Colonial First State Global Asset Management, via InvestorDaily.

 Following the announcement of its full-year financials on Thursday (1 November), which saw NAB’s profit slide by 14 per cent to $5.7 billion, the bank provided an update on its MLC sale.

“On the wealth separation, it is progressing well, including the appointment of Geoff Lloyd as CEO of MLC,” NAB group executive of finance Gary Lennon said. “We continue to target a public market exit by the end of the 2019 calendar year.

“All exit options including demerger, IPO and trade sale are still on the table.”

Rival CBA announced the sale of Colonial First State Global Asset Management (CFSGAM) days before the release of NAB’s results. The surprise $2.9 billion sale to Japanese bank Mitsubishi UFJ Financial Group was over 17 times CFG’s annual profit.

The deal has thrown a new light on NAB’s plans to offload MLC and who a potential buyer could be. In 2016, Japanese group Nippon Life acquired 80 per cent of NAB’s life insurance business for $2.4 billion.

“NAB confirms good progress in work to separate MLC, but we see the process as very complicated and messy and delays will not surprise,” Morningstar analyst David Ellis said.

“The operating environment for all major banks is tough, with legal, regulatory, political and public scrutiny escalating, at the same time earnings growth is slowing,” he said.

“The combined effects of a royal commission, increased regulatory oversight, a weakening housing market, slowing credit growth, softer Chinese economic conditions, rising global interest rates, investment market jitters and the escalating debate around culture, governance and trust in the banking sector means the major banks’ earnings power is under pressure.”

NAB will provide an MLC investor briefing before May 2019.

CBA, Bankwest withdraw from reverse mortgage market

The last remaining major bank offering reverse mortgages, and its subsidiary, will withdraw their reverse mortgage products from sale next year, via the Adviser.

The Commonwealth Bank of Australia (CBA) and its subsidiary Bankwest have announced that they will be removing their reverse mortgage products from sale from 1 January 2019.

As such, as of next year, brokers will no longer be able to write new reverse mortgages to Bankwest nor will CBA offer its reverse mortgage product through its proprietary channel (CBA had withdrawn its reverse mortgage offering from the broker channel last year).

The move means that, as of next year, none of the major banks will offer reverse mortgages.

Speaking of the decision, a CBA spokesperson said: “At the Commonwealth Bank, we constantly review and monitor our suite of home loan products and services to ensure we are maintaining our prudent lending standards and meeting our customers’ financial needs.

“As part of our strategy to become a simpler, better bank, we are streamlining our product portfolio and have made the decision to withdraw our Equity Unlock for Seniors (EQFS) product from sale.”

While the major bank noted that it would be withdrawing the product from sale and for limit increases from 1st January, it added that it would continue to support existing customers with this loan.

Likewise, a spokesperson for CBA-subsidiary Bankwest confirmed that the decision had been taken to withdraw its Seniors Equity Release product from sale for both broker and proporietary channels as of 1 January 2019.

“We will continue to support our existing customers who have this product with us,” the bank’s spokesperson said.

The move comes amid ongoing scrutiny of the reverse mortgage market.

In August of this year, the Australian Securities and Investments Commission (ASIC) released its review of the $2.5 billion reverse mortgage market, outlining that although these products can “help many Australians achieve a better quality of life in retirement” and achieve their immediate financial goals, some borrowers had a “ a poor understanding of the risks and future costs of their loan, and generally failed to consider how their loan could impact their ability to afford their possible future needs”.

ASIC suggested that “lenders have a clear role to play here and need to do more” adding that for nearly all of the loan files the regulator reviewed for the report (including those from CBA and Bankwest), the borrower’s long-term needs or financial objectives “were not adequately documented”.

Further, the Australian Prudential Regulation Authority (APRA) proposed earlier this year that reverse mortgages, which are currently risk-weighted at 50 per cent (where LVR is less than 60 per cent) or 100 per cent (for LVRs over 60 per cent), would be treated as ‘non-standard’ in light of “the heightened operational, legal and reputational risks associated with these loans” and subject to a risk weight of 100 per cent.

Last year, Macquarie and Westpac withdrew reverse mortgage offerings from the market, while Auswide Bank tightened up requirements on its equity release products so that prospective borrowers would be required to provide proof of a satisfactory repayment history over the previous six months.

Update on Commonwealth Bank Fees for No Service Court-enforceable undertaking

ASIC says that on 13 April 2018, ASIC announced that it had accepted a Court-enforceable undertaking (EU) from Commonwealth Financial Planning Limited (CFPL) arising from its  Fees For No Service conduct (18-102MR).

One undertaking required of CFPL was to appoint Ernst & Young (EY) to prepare an independent expert report that considered:

  1. whether CFPL had taken reasonable steps to ensure customers who should have received remediation in the 31-month period from 1 July 2015 to 31 January 2018 did receive that remediation. ASIC’s previous oversight of CFPL’s remediation had considered the period to 30 June 2015; and
  2. whether CFPL had put in place systems, processes and controls to meet its contractual obligations to customers who are paying ongoing service fees.

As set out in ASIC’s Regulatory Guide 100: Enforceable Undertakings, ASIC will make available a summary of an independent expert’s report in these circumstances to promote the integrity of, and public confidence in, the financial markets and corporate governance. A copy of the executive summary of EY’s report can be accessed via the Enforceable undertakings register.

EY’s findings on remediation

In relation to the remediation of CFPL customers, EY found that:

  1. for the periods 1 July 2015 to 31 May 2016 and 5 June 2017 to 31 January 2018, there was no evidence to suggest that CFPL had not taken reasonable steps to ensure that customers who should have received remediation did receive that remediation; and
  2. for the period 1 June 2016 to 4 June 2017 (Period 2), there had been a lower level of customer testing during this period and further work by CFPL was required. EY found that CFPL is in the process of taking reasonable steps to identify and remediate those customers who should have received remediation.

EY will re-assess and report on Period 2 in January 2019 once CFPL has undertaken additional remediation work for that period.

EY’s findings on CFPL’s controls environment

EY assessed whether CFPL had put in place adequate systems, processes and controls to meet its contractual obligations to customers who are paying ongoing service fees.  EY found that there was nothing to suggest that those systems, processes and controls are not reasonably adequate to ensure that CFPL is able to discharge its obligations to its customers. However, EY noted that CFPL could make further improvements to address:

  • a low level of control awareness within the business;
  • a high prevalence of manual processes and controls;
  • limitations on CFPL’s ability to analyse and report information for tracking and reporting of compliance centrally; and
  • the sustainability of its manually intensive processes.

EY will assess and report on whether CFPL has addressed EY’s findings, through the implementation of systems and process improvements, in January 2019.

CFPL has requested an extension of time for EY to produce its final report and for CFPL to provide its senior executive attestation as required under the EU, to 31 January 2019.This extension of time will allow CFPL to undertake the additional work required in relation to Period 2 and to implement the recommendations made by EY to further improve CFPL’s systems, processes and controls.

CFPL is required by ASIC to submit a detailed plan setting out the specific actions that it will undertake to ensure that it addresses EY’s findings and recommendations. The EU will be amended to reflect this additional plan, the timing of the final report and senior executive attestation.