Big banks pay billions to customers burnt in advice scandal

Six of Australia’s banking giants have paid or offered $4.7 billion as of December to compensate customers who suffered loss or detriment after being charged fees for no service or receiving non-compliant advice.

In a statement on Friday, the Australian Securities and Investments Commission said institutions, including AMP, ANZ, Commonwealth Bank, Macquarie, NAB and Westpac, had undertaken review and remediation programs following two major ASIC reviews.

“ASIC compensation for financial advice related misconduct project has shone a light on the advice fees that customers are paying and the services they should be receiving in return,” said ASIC commissioner Danielle Press. “The subsequent programs have resulted in very significant remediation payments to affected consumers.”

About $1.1 billion of the total amount was paid or offered by banking and financial services institutions in the six months to December.

The update – which ASIC anticipates will be the final one – comes after eight years of the watchdog’s work addressing the failure of financial institutions and advisers to provide ongoing services to fee-paying customers.

In 2016, ASIC released a report revealing systemic failures in the advice divisions of AMP, ANZ, CBA and NAB, as well as some of their product issuers. These included the institutions’ failures to provide ongoing advice services to customers who had paid for them, advisers’ failure to provide these services, and product issuers failing to switch off advice fees for customers who did not have a financial adviser.

Another report published in 2017 outlined how AMP, ANZ, CBA, NAB and Westpac identified and dealt with non-compliant advice provided by their advisers between 2009 and 2015, and how they developed and implemented a framework for the large-scale review and remediation of affected customers during that period.