AMP, ANZ, CBA, NAB and Westpac have now paid or offered customers $215.9 million of an estimated $219.5 million in refunds and interest for failing to provide general or personal advice to customers while charging them ongoing advice fees.
This is an additional $155 million in payments and offers since the ASIC's last public update on the fees-for-no-service project, which provided compensation figures as at 21 April 2017.
The table provides compensation payments and estimates for fees for no service failures that were reported to ASIC as at 31 October 2017. The institutions' total estimates have changed over the past six months as they investigated the compensation required and in some cases identified new failures.
| Group | Compensation paid or offered | Estimated future compensation(excludes interest) | Total estimate |
|---|---|---|---|
| AMP | $4,715,188 | Not yet available | $4,715,188 |
| ANZ | $49,178,004 | $712,785 | $49,890,789 |
| CBA | $117,671,810 | $1,517,690 | $119,189,500 |
| NAB | $5,413,535 | $1,289,404 | $6,702,939 |
| Westpac | $3,113,159 | Not yet available (1) | $3,113,159 |
| Total (personal advice failures) | $180,091,696 | $3,519,879 | $183,611,575 |
| NULIS Nominees (Australia) Ltd (2) (no changes) | $35,900,408 | Nil | $35,900,408 |
| Total (personal and general advice failures) | $215,992,104 | $3,519,879 | $219,511,983 |
Source: Data reported by the institutions to ASIC as at 31 October 2017.
Next steps
ASIC will continue to monitor the institutions' compensation programs and supervise the institutions' further reviews to determine whether any additional instances of fees being charged without advice being provided are identified. We will provide another public update in mid-2018.
Background
In October 2016 the Australian Securities and Investments Commission (ASIC) released Report 499 Financial advice: fees for no service (REP 499). The report described systemic failures of the advice divisions of the largest banks and AMP, as well as some of their product issuers, to ensure that ongoing advice services were provided to customers who paid fees to receive these services, the failure of advisers to provide such services, and the failure of product issuers to switch off advice fees of customers who did not have a financial adviser.
At the time of the publication of the report compensation arising from the fee-for-service failures reported to ASIC was approximately $23.7 million, which had been paid, or agreed to be paid, to more than 27,000 customers.
Since REP 499 a further $192 million has been paid or offered to over 276,000 customers.
MoneySmart
Customers who are paying ongoing advice fees for services they do not need can ask for those fees to be switched off. Customers who have paid fees for services they did not receive may be entitled to refunds and compensation, and should lodge a complaint through the bank or licensee's internal dispute resolution system or the Financial Ombudsman Service.
ASIC's MoneySmart website explains how customers can check they are getting the financial advice they paid for. It also has a financial advice toolkit to help customers navigate the financial advice process and understand what they should expect from an adviser, and useful information about how to make a complaint.
Table notes
(1) At the time of publication Westpac had not determined the size of future compensation.
(2) The table shows compensation paid by NAB's superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees (other fees referred to in this release relate to personal advice).
As announced by ASIC on 2 February 2017 ASIC imposed additional licence conditions on NULIS following this and another breach: ASIC media release 17-022MR.
The failure was by MLC Nominees Pty Ltd and MLC Limited. While on 1 July 2016 the superannuation assets governed by MLC Nominees were transferred by successor fund transfer to NULIS, and on 3 October 2016 NAB divested 80% of its shareholding in the MLC Limited Life Insurance business, accountability for this remediation activity (including compensation) remains within the NAB Group.