On Friday, the Australian Securities and Investments Commission (Asic), released an update on its 2016 “fees for no service” compensation programme report.
It said AMP, ANZ, the Commonwealth Bank of Australia, NAB and Westpac will have to pay A$204m in refunds to customers affected by the banks’ failures to provide advice they had charged for.
The watchdog revealed the five institutions have so far repaid A$60.7m to 45,000 customers and the overall figure is increased from the A$176m announced last year.
Asic said it will “continue to supervise” banks to determine “whether any additional instances are identified of fees being charged without advice being provided”.
‘Systemic failure’
The failures emerged last October in report published by Asic which found that Australia’s top four banks and wealth manager AMP have taken advantage of automatic deductions from customers for years, many of whom are “passive” customers who don’t get regular advice.
The report also discussed the “systemic failure” of product issuers to stop charging ongoing advice fees to customers who did not have a financial adviser.
The bulk of the fine will be paid by Australia’s largest lender Commonwealth Bank (CBA), which Asic described as the worst offender, facing a total estimated compensation bill of A$105m plus interest.
Dodgy practices
The regulator revealed that one of the banks charged customers ongoing fees for “retention of client records by your adviser” because “retaining this information may reduce the cost of providing additional advice and service in the future”.
In other instances, financial advisers were allowed keep charging hundreds of customers they “inherited” from departing colleagues even though it was clear they would not be able to advise them at all.
