Australia’s five largest banking and financial services institutions have paid a total of $119.7 million in compensation as at 30 June 2019 to customers who suffered loss or detriment because of non-compliant advice given by financial advisers.
ASIC’s 2017 review, Financial advice: Review of how large institutions oversee their advisers, outlined findings from ASIC’s review of how effectively the banks and financial services institutions supervised their financial advisers.
The review, which commenced in July 2015, focused on how AMP, ANZ, CBA, NAB and Westpac identified and dealt with non-compliant advice by their advisers between 1 January 2009 and 30 June 2015.
The ASIC probe considered the development and implementation by these institutions of a framework for the large-scale review and remediation of customers who received non-compliant advice between 1 January 2009 and 30 June 2015.
The regulator also reviewed Australian Financial Services Licensees, selected from within the institutions, to test their current processes for monitoring and supervising their advisers.
Since the report’s publication, ASIC has been monitoring the ongoing implementation and expert assurance of the institutions’ customer review and remediation programs.
NAB paid the highest amount of total compensation to financial advice customers, with $32.2 million paid to 1,032 customers as at 30 June this year. ASIC documents show the bank has 573 full-time staff working in the remediation of advice clients.
AMP has paid $24.9 million to 1,903 customers, while ANZ has paid $26.7 million. Westpac has 94 full-time resources dedicated to advice remediation and has paid $26.5 million to 1,173 customers as at 30 June.
While CBA has only paid $9.3 million, the figures do not include compensation amounts paid under its other large-scale remediation programs, such as its Open Advice Review Program.
ASIC’s work on advice compliance is part of its broader Wealth Management Major Financial Institutions Portfolio (formerly known as the Wealth Management Project). This work covers several important areas in financial advice including working with the financial advice licensees to address the identification and remediation of non-compliant advice and seeking regulatory outcomes, where appropriate, against licensees and advisers.
Puts everything into perspective as to where the FP industry is heading.
It’s almost worthless except for that adviser who wishes to dedicate their lives to studying, compliance and giving the most basic and boring advice ever. No risk, layers of complexity and legal papers signed off saying you have warned about this and that.
NO THANKS! What a joke this industry has turned into. Future of bad, vanilla advice and charging a fortune for it.
Great job FPA, well done.
@just asking.
The other 8.8billion went on lawyers and auditors. With some being provisioning for further expected remediation.
Are you surprised? Lawyers ran the Royal Commission and created a heap of work for themselves. No conflict of interest there.
This is almost the greatest stitch-up of all time. With financial planners being the unwitting victim.
These figures are a joke. I’ve had some clients reimbursed fees who were genuinely concerned about why, as they have reviewed regular service throughout and are still current clients.
The remediation – a file review costs over $3,000 per file. If the fee was below that amount the bank has repaid the fees instead of even reviewing the file. A basic commercial decision.
Also the systems data didn’t differentiate between an upfront fee and an ongoing fee – so even upfronts have been repaid as part of the Adviser Service fee remediation.
Smaller AFSL’s look out. ASIC is expecting a result from all AFSL’s and they are working their way through.
Forget natural justice and innocent until proven guilty. ASIC assumes guilt and it’s up to you to disprove guilt.
No wonder the suicide rate among financial planners is so high.
[quote=Anon]No rocket science here. The bank’s revolving door staff turnover of financial advisors created the problem. [/quote]
Anon – have you ever considered that the ‘revolving door’ of advisers in the banks comes about because of the pressure that they are put under to hit targets and/or their own realisation that they can’t truly advise clients when they’re merely being used as product distribution channels? Not everyone who left the bank left behind poor advice and compliance issues or made a quick buck and then got out! Maybe the problem in the banks lies further up the food chain than the poor advisers. Just sayin!
Just doing the sums from a couple of articles:
1.
Australia’s five largest banking and financial services institutions have paid a total of $119.7 million in compensation as at 30 June 2019 to customers who suffered loss or detriment because of non-compliant advice given by financial advisers
2.
Remediation provisioning on the part of Australia’s major financial institutions has now exceeded $9 billion, according to Australian Securities and Investments Commission (ASIC) deputy chair, Karen Chester. (https://www.moneymanagement.com.au/news/policy-regulation/remediation-provisioning-reaches-9-billion-says-asic)
WE have spent $9 billion on a problem.
Customers have been compensated $119 million who suffered loss or detriment because of non-compliant advice given by financial advisers
Any thoughts on where the $8.88 BILLION went???
To be honest these figures are not that high given the sheer $ that would have been advised on
No rocket science here. The bank’s revolving door staff turnover of financial advisors created the problem.
Interesting show during the week on SBS with the CBA whistle blower.
You have to wonder what all these compliance bureaucrats will be doing a in a couple of years time when all the remediation will be finished and the industry will have shrunk dramatically in size. I expect most of them will have no opportunities for continued employment in the industry, and no skills for employment elsewhere.