1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

9 years and 6 months (1 July 2008 to 31 December 2017).

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers.

AMP has agreed to include all of its 17 advice licensees that provide personal advice to retail customers.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service.

AMP has advised ASIC that it will review samples of files of all current advisers. ASIC is satisfied with AMP’s sampling approach.

AMP has not yet proposed a methodology for reviewing files of advisers who have departed the AMP licensees.

4

Estimated completion date of further reviews by the institutions

Not applicable.

AMP estimates it will complete its review of current and former advisers, and customer remediation arising from that review, in the second half of 2021.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

AMP has agreed with ASIC’s position for its review of current advisers. AMP has not yet proposed a methodology for advisers who have departed.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

For its review of current advisers, AMP has accepted that, if secondary evidence is relied upon, it will seek reasonable assurance that the annual review was provided from an independent auditor under ASAE 3000 (a relevant assurance standard). AMP has not yet proposed a methodology for advisers who have departed.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

For its review of current advisers, where agreements stipulated the offer of a review and customers declined three or more consecutive offers, AMP will refund the fees for all three periods. AMP has not yet proposed a methodology for advisers who have departed.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

For its review of current advisers, AMP proposes to apportion value to services other than the annual review. ASIC is currently considering AMP’s proposal in relation to current advisers. AMP has not yet proposed a methodology for advisers who have departed.

9

How should refunds be calculated?

In addition to refunding the fees, licensees should refund the interest calculated in accordance with the guidance in RG256.

For its review of current advisers, AMP intends to calculate interest subject to a minimum floor to reflect lost earnings, or to pay the RBA cash rate plus 6% where AMP does not have sufficient data to make an accurate calculation of lost earnings. AMP has not yet proposed a methodology for advisers who have departed.

1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

10 years and three months (1 July 2008 to 30 September 2018).

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers.

ANZ included the three advice licensees it wholly-owned at the time of ASIC’s request in May 2015. They are Financial Services Partners, Millennium3 and RI Advice. IOOF acquired these licensees from ANZ on 1 October 2018. IOOF advised ASIC that ANZ is conducting the review on behalf of IOOF.

ANZ Financial Planning (ANZFP) is not part of the further review because ANZ had, as part of the compensation program, already designed a program to identify and remediate all ANZFP customers who paid fees for no service.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service

ANZ has advised ASIC that it will review samples of customer files for all of the licensees’ current advisers.

ASIC is satisfied with ANZ’s methodology for a group of the licensees’ current high-risk advisers.

ANZ has not yet confirmed its methodology for the licensees’ remaining current advisers, or the licensees’ departed advisers.

4

Estimated completion date of further reviews by the institutions

Not applicable.

ANZ and the licensees have not provided ASIC with an estimated time-frame for completion.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

ANZ has agreed with ASIC’s position in principle. However, ASIC is waiting for details from ANZ and the licensees about how they will apply this approach to their ongoing service agreements and customers as part of the review.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

ASIC and ANZ have not yet agreed on details of external assurance.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

Where customers declined annual reviews in consecutive years, ANZ's methodology does not require refunds. However, the licensees are considering whether they may refund some of these fees.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

ANZ intends to apportion value to services other than the annual review. ANZ and the licensees have not provided a methodology proposal to ASIC in relation to apportioning value to other services.

9

How should refunds be calculated?

In addition to refunding the fees, licensees should refund the interest calculated in accordance with the guidance in RG256.

ANZ intends to calculate interest to reflect lost earnings. However, where that is not possible, ANZ will calculate interest at the RBA cash rate plus 4%, which is inconsistent with the guidance in RG256, which states RBA cash rate plus 6% is appropriate.

1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

6 years for the Pathways division of Commonwealth Financial Planning Ltd (CFPL), 6.5 years for Count Financial Ltd and Financial Wisdom Ltd, and 8 years for Commonwealth Private Ltd.

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers.

CBA included all of its advice licensees. They are Commonwealth Private Ltd, Commonwealth Securities Ltd, Count Financial Ltd, Financial Wisdom Ltd and the Pathways division of CFPL. The further review does not include BW Financial Advice or CFPL’s employee adviser division, because as part of the compensation program they designed a program to identify and remediate all customers who paid fees for no service.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service

Commonwealth Private reviewed all advisers’ files to find clients who paid fees for no service. Commonwealth Securities reviewed a sufficient sample of files. However, the remaining three licensees adopted a file review methodology that ASIC does not consider sufficient to identify clients who paid fees for no service.

4

Estimated completion date of further reviews by the institutions

Not applicable.

CBA completed its further reviews. However, on 18 December 2018, CBA advised ASIC that it will conduct another review of whether customers of Count Financial Ltd, Financial Wisdom Ltd and the Pathways division of CFPL paid fees for no service in the past.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

Commonwealth Private agreed with ASIC’s position.

Count Financial, Financial Wisdom and the Pathways division of CFPL conducted their further reviews on the basis that if customers were merely ‘offered’ an annual review, and if they did not respond to or accept the offer, there was no failure to provide the service (even if their agreement required an annual review, not merely an offer). ASIC is not satisfied with the approach taken by these three licensees.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

Commonwealth Private obtained reasonable assurance from an independent auditor under ASAE 3000 (a relevant assurance standard) that where it relied on secondary evidence, the annual review was provided.

For Count Financial, Financial Wisdom and the Pathways division of CFPL, ASIC strongly disagreed with their approach to evidence. For example, in some cases CBA relied on, amongst other evidence, customer responses to questionnaires as evidence of service delivery.

In light of our fundamental disagreement ASIC did not ask CBA to seek reasonable assurance.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

Commonwealth Private refunded all fees where the customer declined an annual review.

Count Financial, Financial Wisdom and the Pathways division of CFPL considered that a decline or consecutive declines by their customers did not require a refund.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

CBA refunded the entire fee.

9

How should refunds be calculated?

In addition to refunding the fees, licensee should refund the interest calculated in accordance with the guidance in RG256.

CBA calculated interest to reflect customers’ lost earnings or alternatively paid the RBA cash rate plus 6%.

1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

8 years (1 July 2008 to 30 June 2016).

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers.

Macquarie’s review covers both Macquarie Equities Limited and Risk Advice Specialists.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service

Macquarie is in the process of determining which customers paid an adviser service fee that entitled them to an annual review and looking into whether the annual review was provided to them.

Macquarie is not using sampling. ASIC is satisfied with this approach.

4

Estimated completion date of further reviews by the institutions

Not applicable.

Macquarie estimates that it will complete its review and customer remediation arising from that review by mid-2019.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

Macquarie has agreed with ASIC’s position.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

Macquarie has accepted that if secondary evidence is relied upon, it will seek reasonable assurance from an independent auditor under ASAE 3000 (a relevant assurance standard) that the annual review was provided.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

Where customers declined the offer of a review in consecutive periods, Macquarie will refund fees for the second year and subsequent periods where reviews were not provided.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

Macquarie intends to refund the entire fee.

9

How should refunds be calculated?

In addition to refunding the fees, licensees should refund the interest calculated in accordance with the guidance in RG256.

Macquarie has proposed using a proxy rate to reflect lost earnings. Macquarie has proposed using the higher of either the Macquarie Cash Management Account rate or the RBA cash rate. This is

inconsistent with the guidance in RG256, which states that RBA cash rate plus 6% is appropriate.

1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

9 years and 6 months (1 January 2009 to 30 June 2018) for Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, Meritum Financial Group and NAB Financial Planning.

ASIC and JBWere have not yet agreed on the review period.

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers.

NAB agreed to review all its advice licensees. They are Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, JBWere, Meritum Financial Group, and NAB Financial Planning.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service

For each NAB Financial Planning customer who paid ongoing service fees, NAB is either reviewing the customer file (without sampling), or paying a refund and interest without reviewing the file. ASIC is satisfied with this approach.

Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services and Meritum Financial Group have not yet provided a complete methodology proposal to ASIC. JBWere has not yet proposed a methodology to identify if clients paid fees for no service. ASIC is assessing JBWere’s customer agreements to determine what services customers were entitled to.

4

Estimated completion date of further reviews by the institutions

Not applicable.

NAB estimates it will complete its review of NAB Financial Planning and customer remediation arising from that review by the end of 2019. Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services and Meritum Financial Group estimate completing their review and remediation programs by the end of 2020.

JBWere has not provided ASIC with an estimated time-frame for completion.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, Meritum Financial Group and NAB Financial Planning have agreed with ASIC’s position.

JBWere advised ASIC that its customers did not pay fees for an annual review. ASIC is assessing JBWere’s customer agreements to determine what services customers were entitled to.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

All licensees have accepted that if secondary evidence is relied upon, they will seek reasonable assurance from an independent auditor under ASAE 3000 (a relevant assurance standard) that the annual review was provided.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

Where customers declined the offer of a review in consecutive periods, and the agreement required an annual review, Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, Meritum Financial Group and NAB Financial Planning have advised ASIC that they will refund fees for the second year and subsequent periods where reviews were not provided.

JBWere advised ASIC that its customers did not pay fees for an annual review. ASIC is assessing JBWere’s customer agreements to determine what services they were entitled to.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, Meritum Financial Group and NAB Financial Planning advised ASIC that they will refund the entire fee. JBWere has not provided a compensation methodology proposal to ASIC.

9

How should refunds be calculated?

In addition to refunding the fees, licensee should refund the interest calculated in accordance with the guidance in RG256.

Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services, Meritum Financial Group and NAB Financial Planning advised ASIC that they will calculate interest to reflect lost earnings subject to an agreed minimum interest rate, or to pay the RBA cash rate plus 6% where the licensee does not have sufficient data to make an accurate calculation.

JBWere has not provided a compensation methodology proposal to ASIC.

1

Period to be covered by the further reviews

At least 7 years – refer to RG 256.

7 years and 6 months (1 July 2008 to 31 December 2015).

2

Which licensees should be included?

All advice licensees that are part of the institution and provide periodic reviews under ongoing service agreements with retail customers

Westpac has agreed to review all its advice licensees. They are Westpac Banking Corporation, (including St George), Magnitude and Securitor.

3

Identifying customers who have paid fees for no service

Institutions should develop a robust methodology that will enable them to identify customers who paid fees for no service.

Given the number of advisers and clients involved, ASIC does not necessarily expect the institutions to review all client files. Instead institutions may choose to use robust key risk indicators and sampling methodologies to identify if they have customers who paid fees for no service

Westpac used key risk indicators to identify higher risk ‘service periods’ and then reviewed all these higher risk service periods. Westpac is sampling the remainder of the service periods.

St George intends to review all service periods – it is not using sampling. ASIC is satisfied with the approach taken by Westpac and St George. However, Westpac has not yet provided a methodology for Magnitude and Securitor.

4

Estimated completion date of further reviews by the institutions

Not applicable.

Westpac estimates it will complete its review of Westpac Banking Corporation and St George as well as customer remediation arising from those reviews, in the second half of 2019.

However, Westpac has not provided an estimate for completion of its review of Magnitude and Securitor advisers.

5

Is an offer of an annual review sufficient?

The institution should avoid a legalistic approach to whether its ongoing service agreements entitle customers to annual reviews. If the agreement requires an annual review, the mere offer of an annual review is not sufficient.

Westpac has agreed with ASIC’s position.

However, Magnitude and Securitor have not yet provided a methodology proposal to ASIC.

6

What evidence is necessary to demonstrate that an annual review was provided?

If the institution relies on evidence other than a statement or record of advice as evidence of an annual review, it must obtain external assurance around the review outcomes.

Westpac has accepted that if secondary evidence is relied upon, it will seek reasonable assurance from an independent auditor under ASAE 3000 (a relevant assurance standard) that the annual review was provided.

Magnitude and Securitor have not yet provided a methodology proposal to ASIC.

7

Treatment of customers who declined an annual review

If a customer declined annual reviews in consecutive years, the licensee should refund some fees (as consecutive declines may indicate that the ongoing service arrangement is unsuitable for the customer).

Where customers decline two consecutive reviews, Westpac will refund the fees for the second and subsequent consecutive periods where the customer declined. Magnitude and Securitor have not yet provided a methodology proposal to ASIC.

8

What if the client paid 'bundled' fees, i.e. a single fee for a number of services, including an annual review?

Licensees should refund the entire fee unless the agreement required the provision of substantive services other than the annual review, and those other substantive services were provided.

Westpac intends to refund the entire fee.

However, Magnitude and Securitor have not yet provided a methodology proposal to ASIC.

9

How should refunds be calculated?

In addition to refunding the fees, licensee should refund the interest calculated in accordance with the guidance in RG256.

Westpac intends to calculate interest to reflect lost earnings using benchmarks based on the client’s risk profile. If Westpac cannot determine a customer’s risk profile, it will apply the best of the benchmarks. Westpac will not reduce a customer’s refund if the benchmarks led to a negative return.