In a statement, ASIC said it was currently monitoring over 100 remediations that, when finalised, could see the return of at least $3.55 billion to over 3.6 million consumers.
“There are many other remediations that are dealt with by firms without any ASIC involvement,” the regulator said.
ASIC said the programs it had been involved in across financial services over the past four years included fee for no service remediations across the major banks and “smaller remediations arising out of systems errors and failures by licensees to deliver on their contractual promises to consumers”.
“While ASIC has seen some good practices by licensees, we have also seen many remediations caused – or blown out – by ongoing systems failures, ultimately resulting in significant costs to licensees and further harm to consumers,” the regulator said.
“There are opportunities for firms to not only identify the issues that can lead to remediations earlier, but also to make sure that they have arrangements and systems in place to return money to affected consumer as fast and as fairly as possible,” ASIC acting chair Karen Chester said.
“We are also seeing some positive signs from firms who are looking at ways to fast track remediations, including through the use of beneficial assumptions.”
In its Consultation Paper 335, which provided an update to previous regulatory guidance on remediation, ASIC has proposed licensees use “only beneficial assumptions” when making assumptions in a remediation program.
ASIC said an assumptions-based program could speed along a remediation process rather than relying on individual file reviews, and should also be used where records may be absent. However there were issues to consider in the way assumptions were used, such as average-based assumptions that may not meet a licensee’s obligations, the regulator said.
ASIC also acknowledged that beneficial assumptions may not be “reasonable or possible beyond the seven-year record-keeping period [and] may vary according to each remediation and a licensee’s capabilities, including data management capabilities and resources”.
“For example, we do not expect that a small financial advice firm will have the same capabilities or resources as a larger firm,” the regulator said.
The regulator’s paper also suggested that licensees should apply “best endeavours to find and automatically pay consumers” affected by a remediation program, and that “cheques should generally be issued as a last resort”.
Imagine how much more that figure would ‘blow out’ if ASIC ever shrugged off their corrupt leadership group and actually did their job and investigated the shonky house of cards called industry funds!!
are you one of the ones back in March saying Industry funds would be gone by Christmas?
Anon, that’s hardly much of a response to the massive fee for no service involved in these funds.
It is allowed under the current legislation. Of course that doesn’t mean it is ok, but not illegal and in the same realm as what the majors were doing.
Ah no, that would be ludicrous to imagine Labor and the unions would ever let go of the cash cow that they have been milking so hard for so many years. Amazing however isn’t it, how quickly they found they actually could after all revalue unlisted assets when there were so many members taking advantage of the $10k release? Obviously a little scared that their shonky house of cards was getting shaky.
Maybe one day ASIC can one day regulate our whole banking system into collapse. What’s the tax deduction on $3.5 billion anyway? Guess who pays for that? the people.
A tax on the big banks and a Covid 19 stimulas package for consumers. I was with a bank owned licensee that looked back 10 years ago and it’s paying back commissions and evens clients fees that actually received services.
BTGL / Westpac just sent a letter to my deceased client, his widow was really impressed! Well done Westpac, your incompetence continues
It is blowing out because of ridiculous technicalities whereby we have done what we said but due to little technicalities we have to pay the client back. ie SOA says “we recommend an annual review however the frequency will be agreed upon when you proceed”. Client agrees to 3 yearly review and licensee accepts a file note regarding discussion when a written service agreement is not made. Now the client has to be repaid not because we didn’t do what we agreed but because of what the SOA says. The clients can’t even sign anything to say, no sorry we agree it was supposed to be a 3 yearly review and as such do not expect a refund. It’s really a witch hunt that just makes us all look bad.
no. Charging people every month for a 3 year review is the scam. If you don’t recognise that this is a problem, then maybe you are part of the problem.
Would be interesting to see how big the remediations costs are per adviser per year of practice for each firm. For some of the big four it might be $100,000 per adviser per year. Also interesting how much AMP and IOOF have paid on this metric.
AMP and IOOF have paid far less because they are trying to limit their payments to genuine cases of fee for no service. The big 4 are handing out “remediation” payments willy nilly to get ahead of ASIC and protect their much more valuable banking operations.