Commonwealth Bank of Australia has decided to suspend preparations for the planned demerger of its wealth management and mortgage broking businesses to focus on remediating past issues and refunding customers after an investigation into the financial industry shed light to misconducts.
The bank is in the process of managing refunds and provisions as a result of the banking royal commission's investigation. It has so far spent A$1.46 billion to address issues over recent years, including A$1.22 billion relating to the wealth management business, according to a March 14 release.
The provisions include A$610 million paid to customers for refunds in relation to advice quality, fees for no service, Credit Card Plus, CommInsure Life Insurance and Loan Protection Insurance, as well as banking fees and interest. It also include A$650 million in program costs and internal process improvements, as well as A$200 million for an indemnity provision for wealth management-related remediation issues and program costs.
The concluded banking royal commission released its final report in February, which included 76 recommendations to address the root causes of misconduct in the country's financial industry.
The bank reiterated that it is still committed to ultimately exiting its wealth management and mortgage broking businesses.
In June 2018, The Australian banking group announced that it will spin off its wealth management and mortgage broking businesses. The demerged entity was proposed to be called CFS Group, and will include Colonial First State, Colonial First State Global Asset Management, Count Financial Ltd., Financial Wisdom Ltd. and Aussie Home Loans Pty. Ltd.