Commonwealth Bank's financial planning customers will get financial advice for free after the bank failed to meet its obligations from the fees-for-no-service scandal.
Commonwealth Financial Planning Limited said on Monday it will stop charging ongoing fees to its customers by April 1.
"Existing financial planning customers will continue to have access to all services that usually form part of their service arrangements, including the offer of an annual review," the bank said in a release.
The Australian Securities and Investments Commission had earlier ordered the bank to halt charging the fees after an independent expert reported back last Thursday that it still had concerns about the bank's remediation program and compliance systems.
Specifically, Ernst & Young said there remains a "heavy reliance" on manual controls, which "have a higher inherent risk of failure due to human error or being overridden".
ASIC said as a result it had triggered a provision in a court enforceable undertaking that forbids CFPL from charging fees or accepting new customers.
CFPL agreed to the enforceable undertaking last April after the royal commission found it had routinely charged customers for financial advice where no advice services were provided.
"ASIC included this requirement in the EU (enforceable undertaking) 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," ASIC said.
CFPL won't be able to charge fees or accept new customers until it satisfies ASIC that all of the outstanding issues are remedied, ASIC said.
A bank spokeswoman declined to say how many customers would receive free advice, but Commonwealth Bank said the move would cost it about $40 million.
Angus Sullivan, group executive of Commonwealth Bank's retail banking services, said in a statement that CBA accepted the requirements that ASIC included in the enforceable undertaking.
"We've taken immediate steps to comply with these requirements," he said, adding that the bank will also be changing the way it charges for financial advice.
"CFP will be moving to a new financial advice fee model where customers will pay for advice services when they are delivered," Mr Sullivan said.
"The details of this model are currently being worked through and further information will be communicated to customers when they are finalised."
CBA shares closed up 54 cents, or 0.77 per cent, at $70.30.
