Commonwealth Bank of Australia will close its last remaining...

Commonwealth Bank of Australia will close its last remaining retail financial planning business after shutting down most of its troubled advice operations in 2019 and signing a referral deal with insurer AIA in July.

Australia’s largest bank will cease providing financial advice to regular retail customers from November 30 and shut down its Commonwealth Financial Planning (CFP) subsidiary as it hastens its exit from wealth management.

Commonwealth Financial Planning whistleblower Jeff Morris campaigned for the Hayne royal commission. Dominic Lorrimer

CFP was unique within the bank’s once-sprawling financial advice operations for employing full-time, salaried financial planners working in bank branches and call centres, rather than providing a licence and services to self-employed firms in what was known as the “dealer group” model.

The business – once one of Australia’s largest financial advice providers – was marred by whistleblower and media reports of misconduct and “boiler room” tactics, which sparked a parliamentary inquiry. The testimony of former CFP planner Jeff Morris helped push the formation of the Hayne royal commission.

It is understood about one third of the 450 employees of Commonwealth FP will join Asian life insurance giant AIA to work for its new Financial Wellbeing initiative commencing in December.

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CBACommonwealth Bank

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NABNational Australia Bank

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The remainder will either be re-skilled and re-deployed elsewhere in the bank or forced to find another employer or licensee. Some may be tapped to join Commonwealth Private, the bank’s advisory business for wealthy and wholesale investors. Commonwealth Private ceased providing advice to any retail investors – which triggers stricter regulatory compliance and disclosure obligations – in June last year.

“CFP customers with life insurance, superannuation and wealth advice needs who meet AIA’s licence and have not opted-out of the transfer are being closely supported with a smooth transition to AIA to help manage their ongoing financial planning needs,” said a statement from the bank.

“CFP customers who have financial advice in progress will continue to be supported by CFP to complete and implement the advice before 30 November.”

Robo return

From December, bank customers with financial advice needs identified by “frontline teams” will be referred to AIA Financial Wellbeing, under the terms of an arrangement announced in July.

CBA sold the Count Financial dealer group to then-affiliated company CountPlus in June 2019 for $2.5 million, having purchased it from former Rich Lister Barry Lambert for $373 million in 2011. Two months later, it shut down the Financial Wisdom dealer group.

The bank’s chief executive, Matt Comyn, told a parliamentary hearing in November 2019 that CBA was committed to its salaried CFP business and to providing some form of advice to regular customers.

The about-turn on CFP comes as analysts expect the banks to expand into digital forms of financial advice. A CBA spokesman last week told the Financial Review the bank “continued to evaluate” whether robo-advice functionality might be an appropriate add-on to CommSec trading business or Pocket app.

All four of the major banks have, to varying extents, retreated from the wealth management market since the royal commission.

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CBA will exit retail financial advice but remain a minority investor in its Colonial First State wealth arm – which does not provide advice but distributes superannuation and investment products through independent advice firms – after it sells a controlling stake to private equity giant KKR later this year.

Westpac shut down its financial advice operations in 2018 and is in the process of selling its remaining wealth management assets. ANZ and National Australia Bank both sold their financial advice and investment arms to ASX-listed wealth manager IOOF.