AMP, ANZ, CBA, NAB and Westpac have paid or offered customers $222.3 million in refunds and interest for charging fees to customers while failing to provide ongoing advice.
ASIC’s fees for no service project (“FFNS Project”), which began in 2015, reviewed the extent of charging fees for no service amongst Australian financial services (“AFS”) licensees that are product issuers or provide personal advice to retail clients, and are part of AMP, ANZ, CBA, Macquarie Group Limited, NAB and Westpac.
At the conclusion of the investigation, ASIC published Report 499: Financial advice: fees for no services (“report”) in October 2016. The report found that there were substantial failures within the advice divisions of these Australian banks and AMP to provide the financial advice for which customers were paying ongoing fees. At the time of the report ASIC had received reports for fee for service failures which amounted to $23.7 million in compensation to be paid, or agreed to be paid, to over 27,000 customers.
However, this amount of compensation has increased significantly since the report was published, particularly in light of the Royal Commission into Misconduct in the Banking Superannuation and Financial Services Industry, which began 13 March 2018.
ASIC has now announced that AMP, ANZ, CBA, NAB and Westpac have paid or offered customers $222.3 million in compensation for charging fees for no services. ASIC is also monitoring fees for no service remediation programs proposed by other AFS licensees. ASIC has stated that is it aware of five additional AFS licensees or institutions that have provisioned for future remediation payments, and that if such provisions are paid in full, compensation for charging fees for no service may exceed $850 million.
ASIC will continue to monitor entities’ compensation programs for fees charged for no services. ASIC has stated that it will be conducting further reviews into entities subject to ASIC’s FFNS Project, to investigate whether any fees for no service have been charged to customers since ASIC’s report. ASIC intends to publish a media release on its findings in the coming months.
ASIC has also published Information Sheet 232 that sets out ASIC’s expectations of licensees remediating fees for no service.