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Facing the joint committee on corporations and financial services on Friday (19 March), ASIC deputy chair Karen Chester said that the large institutions had “systemically under-invested” in their remediation programs and must “err on the side of generosity” when paying back customers.
“This is very resource-intensive for us … out of the 88 matters that we’ve been monitoring, $1.73 billion has been returned to consumers so far, but we’re waiting on a further $3.6 billion to go out the door to 4 million Australian consumers. We are talking about large amounts of money, and we’re very frustrated,” Ms Chester said.
Ms Chester was responding to a line of questioning from MP Bert van Manen, who was told by banks that remediation programs had “ground to a halt” because they were being “forced” to spend millions on lawyers and accountants to ensure that they were complying with regulations – reasoning that Ms Chester “rejects completely”.
“That is their commercial choice. The draft regulatory guidance that we’ve put out has tried to give them some confidence that they can make assumptions and they can use formulas such that they don’t need to spend hundreds of thousands of dollars on lawyers and consultants to get a precision answer,” Ms Chester said.
“But in doing that, they must err on the side of generosity, because they’re making assumptions. It’s their commercial choice not to do that. It’s not ASIC’s … the margin needs to tilt towards generosity. It’s their call not to do that.”
ASIC has previously faced questions about the apparent slowness of the large institutions’ remediation programs in the aftermath of the Hayne royal commission, with senator Deborah O'Neill urging them to work harder on returning money to consumers.
“You’ve spent months arguing with them and they are still not compliant with returning money to the people they’ve ripped off. They’re giving the money instead to the auditing companies to manage the slowness of the process. It’s just plain wrong,” Ms O’Neill said in a hearing in July 2020.
[Related: ASIC sues major bank]