ASIC figures have revealed the true cost of poor advice for Australia’s major banks. NAB is currently paying 573 full-time employees to work on the issue.
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.
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