Amid calls for increased scrutiny of the finance sector, the Australian Securities and Investments Commission (ASIC) has released a shocking report revealing that 200,000 Australians may have paid for financial advice they never received.
The Financial advice: Fees for no service report discloses more damning evidence that banking and financial institutions such as AMP, ANZ, CBA, NAB and Westpac need to be cleaned up.
ASIC’s report reveals that around $23 million in refunds has been paid to 27,000 big bank and AMP customers for ‘sham’ financial advice, with a further 175,000 people who could still receive around $154 million in compensation as the review into the sector continues.
The watchdog’s investigation covers customers who actually have financial advisers and pay fees for advice they do not receive and customers who don’t even have financial advisers but are charged fees for advice anyway.
All told, around $178 million in compensation may be doled out to 203,000 hoodwinked customers.
The report certainly strengthens the stance long-held by not-for-profit organisations that have petitioned to prevent sales commissions in an effort to protect consumers.
“The ASIC findings are another shocking insight into the governance of Australia’s major banks. It is instructive that the banks vigorously lobbied against laws that prohibited this type of misconduct,” said Industry Super Australia Chief Executive David Whiteley. “Australia’s banks are engaged in cross-selling, charging for financial advice that they don’t provide and dragging their heels on moving default super into low cost accounts.
“This pattern of behaviour goes to their governance and casts doubt on the compatibility of the banks and compulsory super.”
With Labor’s calls for a royal commission into the banking and finance sector seemingly going unheeded, the Government’s announcement last week that it will install a new ‘watchdog’ to govern the sector could be a step in the right direction. But unless harsh penalties are handed out to big banks and financial institutions that engage in unscrupulous practices such as those found in this report – it may not be enough to clean it up.
Are you one of the 200,000 Australians who has received dodgy financial advice? Have you received, or will you seek, compensation?