Banks compensate fees for no service misconduct

Banks compensate fees for no service misconduct
Banks compensate fees for no service misconduct

Six of Australia's largest banking and financial services institutions have paid or offered a total of $1.05 billion in compensation, as at 30 June 2020, to customers who suffered loss or detriment because of fees for no service (FFNS) misconduct or non-compliant advice.

This is an additional $295.9m in compensation payments or offers by the institutions from 1 January to 30 June 2020.

AMP, ANZ, CBA, Macquarie, NAB and Westpac (the institutions) undertook the review and remediation programs to compensate affected customers [i] as a result of two major ASIC reviews. ASIC commenced the reviews in 2015 to look into:

  • the extent of failure by the institutions to deliver ongoing advice services to financial advice customers who were paying fees to receive those services and
  • how effectively the institutions supervised their financial advisers to identify and deal with ‘non-compliant advice’ – i.e. personal advice provided to a retail client by an adviser who did not comply with the relevant conduct obligations in the Corporations Act, such as the obligations to give appropriate advice or to act in the best interests of the clients, at the time the advice was given. 

The table below provides a breakdown of the compensation payments made or offered by the institution as at 30 June 2020.

Institution

FFNS misconduct

Non-compliant advice [iii]

Compensation paid or offered

No. of customers paid or offered compensation

Compensation paid

 

No. of customers paid compensation

AMP

$145,719,911

199,425

$28,647,008

2,043

ANZ

$66,653,885

26,461

$39,182,569

1,920

CBA

$167,131,529

54,826

$9,354,027

626

Macquarie

$3,970,000

983

-

-

NAB

$368,075,052

626,863

$52,185,609

1,623

Westpac

$130,508,318

28,350

$34,197,446

1,647

Total

$882,058,695

936,908

$163,566,659

7,859

ASIC released REP 499 in October 2016 describing systemic failures in the advice divisions of AMP, ANZ, CBA and NAB, as well as some of their product issuers. These included the failure to ensure provision of ongoing advice services to customers who paid fees to receive those services, the failure of advisers to provide those services, and the failure of product issuers to switch off advice fees of customers who did not have a financial advise.

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Asic Banks

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