The Commonwealth Bank of Australia has revealed that its Financial Wisdom licensee will be closed down and no longer offer licensing services by June 2020, bringing to an end continued speculation on the fate of the beleaguered entity.
In its FY19 ASX results announcement the bank said it had decided to cease providing licensee services through Financial Wisdom “and will proceed with an assisted closure”.
Financial Wisdom had 324 advisers registered on ASIC’s register at March this year.
CBA also announced that it will let the advisers in its Commonwealth Financial Planning Limited-Pathways group “transition to self-licensing arrangements or move to another licensee”.
“We have simplified our business including through the sale of Sovereign, TymeDigital, Count Financial and Colonial First State Global Asset Management, and have announced our exit from aligned advice,” chief executive Matt Comyn said in a statement.
No further detail was given on the bank’s NewCo demerger, which was announced in June, 2018 before being put on hold in March.
According to the bank an estimated $26 million (pre-tax) was paid to “support” Financial Wisdom and CFP pathways, as well as other internal project costs, in FY19. The results show that Financial Wisdom and CFP Pathways combined for a post-tax loss of $11 million, ex-remediation provisions.
The nation’s largest bank also said it paid $534 million in total aligned advice remediation in FY19, with 75 out of 156 remedial milestones completed in its remediation plan. Including program costs, the bank spent over $1 billion on customer remediation in 2019, and $2.2 billion over the past two years.
“We want to complete that work as soon as possible and return that money to our customers,” Comyn said in a briefing held with investors and analysts today.
It will continue to remediate customers of financial Wisdom.
No compelling synergies
The Financial Wisdom announcement comes two weeks after Professional Planner revealed that a sale or buyout of the licensee was looking “increasingly unlikely”.
At the time, industry sources noted that while CBA’s sale of licensee Count Financial to CountPlus in June made sense due to CountPlus’s converged accounting and advice model and their shared history, there were no “compelling synergies” for Financial Wisdom that would lead to a viable sale agreement.
Yesterday the CountPlus purchase of Count Financial was strongly supported by its shareholder base yesterday, with 99.76 per cent voting to acquire the business.
CBA said the Count Financial sale is due to be completed in October, after which it will look to sell its 35.9 per cent shareholding in CountPlus.
Accompanying the Financial Wisdom news was the bank’s headline figures for FY19, which included a 4.7 per cent reduction in its statutory profit to $8.57 billion, a dividend per share of $4.31 and a 2.5 per cent increase in operating expenses, partly due to remediation costs.
CBA touted its digital growth, with 63 per cent of transactions (by value) now conducted online, up from 59 per cent last year and 54 per cent in 2017.