Financial institutions could be collectively paying more than $850 million to remediate customers who were charged fees for financial advice they did not receive, the Australian Securities and Investments Commission (ASIC) has estimated.
The corporate regulator confirmed in its report on 7 August that the big four banks and AMP had already paid or offered customers $222.3 million in refunds and interest for failing to provide financial advice after levying fees.
However, this is based on figures reported to ASIC as at 30 June 2018, with ANZ Bank, Commonwealth Bank, National Australia Bank, and AMP providing updated remediation figures that cover expected future payouts.
AMP recently revealed it would be paying $290 million post-tax in compensation to customers for fees-for-no-service failings, which is in addition to the $22 million in remediation costs incurred in the first half of the 2018 financial year.
As at 30 June 2018, NAB reported a payout estimate of $6.7 million, but later provisioned an additional $65 million, according to ASIC’s report.
However, NAB’s group-wide remediation bill has further ballooned, with ASIC revealing that the bank’s superannuation trustee NULIS is paying more than $102.9 million in compensation to super customers who were wrongly charged for general advice, as highlighted in the fifth round of royal commission hearings.
Commonwealth Bank’s final bill for fees-for-no-service remediations will exceed $143.3 million (as at 30 June) after confirming it had provisioned for additional payments of approximately $25.2 million.
ANZ Bank’s bill stood at $59.2 million as at the end of June, but has informed ASIC that it has provisioned for additional payments. The major bank has not yet shared its future remediation estimate with the corporate regulator.
Westpac, which has refunded $6.9 million to customers it wrongly charged as of 30 June, has also not disclosed an estimate of its future compensation payouts, ASIC has said.
Other Australian Financial Services License holders have also reported refund estimates to ASIC for fees-for-no-service breaches.
Bendigo Financial Planning ($2.5 million), State Plus ($37.2 million), Yellow Brick Road Wealth Management ($101, 477), and BankVic (unspecified) collectively booked around $259.6 million, which covers past and future payouts to affected customers.
Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.