Finance bodies ‘too slow’ in reviews of fees-for-no-service scandals: ASIC.
Six of the major banking and financial services institutions condemned by the financial services royal commission for their ‘fees-for-no-service’ practices have again been lashed for inaction, prompting some commentators to question whether bankers can change their spots.
AMP, ANZ, CBA, Macquarie, NAB and Westpac are yet to complete further reviews to identify systemic fees-for-no-service failures beyond those reported to the regulator since 2013, the Australian Securities and Investments Commission (ASIC) has revealed.
AMP has told ASIC it doesn’t expect to complete its review of customer remediation until the second half of 2021.
ANZ has not provided an estimated timeframe. Macquarie says it expects to wrap up its remediation program mid year – but ASIC is unhappy with its proposed rate of compensation. Neither NAB nor Westpac have offered estimated completion dates or methodology for reviews of their subsidiaries, while the Commonwealth Bank has completed its review but intends to start another.
ASIC said the big four banks and AMP expected to pay more than $1.15 billion in compensation, including about $350 million already paid or offered to customers.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, headed by Kenneth Hayne, was told that some clients were charged fees for financial advice 10 years after they had died and that customer complaints dated back to 2008.
ASIC commissioner Danielle Press said the reviews had been “unreasonably delayed” and welcomed the Government’s commitment to give ASIC new powers to speed up the process.
She said ASIC acknowledged that the reviews were large scale, relating to systemic failures going back six to 10 years and covering 36 licensees from the six institutions that authorise more than 7000 advisers. “However, we believe the institutions have failed to sufficiently prioritise and resource their reviews,” she said, “particularly as ASIC advised them to start the reviews in mid-2015 or early 2016.”
The main reasons cited or blamed for delays were:
- poor record-keeping and systems within the institutions, which mean that in many cases they have been unable to access customer files for review
- failure by some institutions to propose reasonable customer-centric methodologies to identify and compensate customers, despite ASIC’s clear articulation of expectations
- a legalistic approach.
In his final report, Mr Hayne said he had informed ASIC that at least two entities may have broken the law and engaged in dishonest conduct by charging fees for no service. Mr Hayne invited the watchdog to consider whether it should begin criminal or other legal proceedings.
Do you believe the royal commission has produced sufficient reform in the financial services sector? Is ASIC moving fast enough and showing enough muscle?