Commonwealth Bank says its financial planning arm has not been charging "ongoing service fees" — or fees for no service — to new customers since Friday.

Key points: ASIC found that CBA's financial planners charged 'fees for no service' to 31,500 customers

ASIC found that CBA's financial planners charged 'fees for no service' to 31,500 customers The regulator also found that the company breached its financial services licence

The regulator also found that the company breached its financial services licence ASIC has banned Commonwealth Financial Planning from earning any fees until it takes 'reasonable steps' to remediate victims

However, it will take the bank longer to end that unscrupulous practice — which was strongly condemned at last year's banking royal commission hearings — for its existing customers.

CBA said it expected, by April 1, "to have completed the stopping of charging ongoing service fees for the vast majority of customers".

It did not specify when all of its customers would be taken off that arrangement.

The bank announced its decision after the Australian share market closed, and estimated it will lead to a $40 million drop in pre-tax profit.

"CFP [Commonwealth Financial Planning] will be moving to a new financial advice fee model where customers will pay for advice services when they are delivered," said Angus Sullivan, CBA's head of retail banking services.

"The details of this model are currently being worked through and further information will be communicated to customers when they are finalised."

Earlier this morning, CFP was ordered by the corporate watchdog to immediately stop charging its customers "ongoing service fees".

The Australian Securities and Investments Commission (ASIC) said CFP had breached a court-enforceable undertaking in relation to its "fee for no service" scandal.

CFP was also ordered not to enter into any "new ongoing service arrangements" with customers — essentially a ban from accepting any new work or customers.

It was supposed to submit a final report on January 31 — prepared by its independent expert Ernst & Young (trading as EY) — on whether it had taken "reasonable steps" to remediate overcharged customers.

However, CBA's financial planning division missed that deadline because the consulting firm prepared a different report outlining problems with compliance.

In an unexpected blow to Australia's largest bank, the report criticised CFP's remediation program for having "a heavy reliance" on manual controls, which "have a higher inherent risk of failure due to human error or being overridden".

EY also recommended that CFP address those issues within 120 days.

ASIC was also waiting to receive an attestation last Thursday — from a CBA "accountable person" in regards to the adequacy of CFP's customer remediation program, along with its internal systems, processes and controls.

The regulator said it received a written update from CBA, but it was not "acceptable" in light of "concerns raised by the independent expert".

How did it happen?

CBA's financial planning business was found to have systemically charged "ongoing service" fees to 31,500 customers between July 2007 and June 2015, and failed to provide them with "annual reviews".

However, CFP was unable to provide any evidence to ASIC that it actually provided any services to those customers.

Among its other failures, the regulator said CFP breached its financial services licence as it had failed to do "all things necessary to ensure that the financial services ... are provided efficiently, honestly and fairly" (as mandated by the Corporations Act).

"Senior management were aware from at least mid-2012 that a relatively small number of CFP ongoing service customers who were not assigned to an active adviser may not have received an annual review," ASIC said in April.

The regulator also said "there was a potential risk of a broader 'fees for no service' issue" but that "CFP did not notify ASIC of the issue until July 2014" — seven years after its first breach.

As a consequence of the investigation, both parties entered into an enforceable undertaking in April.

CFP was originally given until December to implement an adequate remediation program for the overcharged customers, but the deadline had since been extended to January 31.

In today's statement, ASIC noted that the company had already paid $119 million to customers who were charged fees, but provided with no actual services.

But since CFP was "not able to satisfy ASIC that the fees for no service conduct would not be repeated", the regulator took the unusual step of banning the company from earning any fees for its work.

ASIC's rationale was that it wanted to "significantly reduce any further risk to clients".

Commonwealth Bank's share price rose 1 per cent to $70.43 at 1:30pm (AEDT).