The corporate regulator has confirmed that $3.15 billion as at 31 December 2021 has been paid or offered to customers of AMP, ANZ, CBA, Macquarie, NAB and Westpac who suffered loss or detriment because of “fees for no service misconduct or non-compliant advice”.
Almost $1.3 billion of that figure was paid or offered between 1 July and 31 December 2021.
NAB paid or offered the most compensation out of any of the institutions with $1,127,275,888, ahead of Westpac with the second most amount at $894,957,011.
Meanwhile the highest number of customers who were paid compensation came from AMP with the total figure being 2,852.
The six institutions undertook the ASIC review that looked into the extent of failure to deliver ongoing advice services to customers who were paying feeds to receive those services and how effectively the institutions supervised their advisers to identify and deal with “non compliant-advice”.
See the full breakdown below.
Recent correspondence from CBA states that the refund is because the Fee disclosure statement which commenced from 1st July 2013 may be incorrect. Without reference to the advice file they decided to pay a refund for the period 1st October 2011 to 30th June 2012. That’s right over a year before it was due because something that wasn’t required may have been incorrect? And this is all ok? Do they all have any idea what they are doing? Oh so wrong on all accounts and nothing to do with the adviser. Yet the adviser is painted as being the problem? Please just try and get it right for all our sakes!
I have reviewed every client, every year, since I started in this industry in the early 2000’s, with NO exceptions. Yet my former bank employer paid out over $500k in refunds on my book, not because of any errors in advice, nor any lack of service, but because they changed software systems along the way and lost record of the service provided over 2 years as a result. This same employer has 500 advisers who no doubt had the same thing happen. So the numbers aren’t all that they seem!
Shipton gave evidence at the RC that record keeping requirements are 7 years – yet ASIC look backs went further back than 7 years.
Intra fund advice fee’s are a huge fee no service no problem… but ASIC thinks its ok to talk about how we expand the service to give full personal advice no worries doesn’t matter if the customers use it or not
Genuinely interested. The cost of intra fund advice comes from the Administration fees paid for by all members.
Why is it that you claim the fee for no service to be a problem (I assume you are saying they pay admin fees and don’t get advice) when the retail super funds charge higher Admin fees (generally) and their members get nothing in return.
“The cost of intra fund advice comes from the Administration fees paid for by all members.”
If Intra Fund advice was a worthwhile for any member, then that member would be willing to pay for the service/advice when used rather than charging everyone for things they never use. Additionally, seems to me that any advice from a product provider would be seriously conflicted to retain or increasing FUM.
Imagine a client with a Mortgage asking should they increase Salary Sacrifice to Super – what would the product manufacturer say I wonder? Conflicted much?
Sad state of affairs when ASIC defines “service” that being sell BHP and buy RIO and then applying 2021 standards all the way back to 2009.
A drop in the ocean. What lurid style of clandestine arrangements do these companies have with the regulator to be able to ‘get off’ with fines of such piddling insignificance compared with their full year profits. More like a donation to government to stay out of their way. Imagine a normal advisers simply making mistakes in an SoA – he’d be fined [b]heavily [/b]or suspended for a time which could easily cause him to lose home and family. One rule for some, eh?!
It would be interesting to see how much the programs run by AMP and NAB, where they automatically paid Fee for no Service compensation to clients who were under a certain threshold amount ($400 or $500 per year) without even checking the client files. Clearly the average payouts for AMP ($1,816 per client) and NAB ($1,494 per client) are much less than the others. It is one thing to publish these huge numbers, however I think there needs to be much more transparency around what makes up these numbers. How much was attributed to poor record keeping, changes in the standard that was applied ,or these automatic payout programs, versus genuine failure to provide services? These are huge numbers and deserve more analysis and explanation.
Of this $3.15B I suspect about $3M was to compensate genuinely disadvantaged clients, and the rest was institutional PR and/or ASIC intimidation payments. Most of the recipients were never asked about their situation, were happy with the service received from their adviser, and don’t understand why they were paid a refund.
Hopefully there will be class action at some point in the future by advisers who were defamed by the payment of “remediation” in relation to their perfectly good service.
$3 billion they had to hand back to clients because they ripped them off, and ASIC has taken no action against any of the licensees or executives that manage them. They are all still happily working in the industry cooking up the next scheme.
Meanwhile, Dover, who ASIC found no evidence of any clients that had been ripped off had their AFSL cancelled for having a dodgy Client Protection Policy.
Great one ASIC, you sure are looking out for the consumer.
ASIC must feel great yet this is an absolute farce.
Inappropriate advice? So much of this is subjective.
If it wasn’t for an environment of intimidation and fear perpetrated by ASIC then these figures would be colossally smaller.
The majority of these amounts is far from subjective; it’s the product of incompetence, carelessness, hubris, and sometimes outright criminal behaviour.
Of course it is… some (lots) of advisers just unhappy as the gravy train is derailed.
Intra Fund Advice gravy train is OK I hope?
You’re probably right, some of the claims are subjective, but its pretty clear that alot of it was for charging clients for services they never received. How any adviser can pretend this is ok says alot about the quality of advisers in the industry.
No adviser is pretending it’s OK to charge clients for services that weren’t delivered. They are saying it’s not OK to accuse advisers of failing to provide services, when they did. It is just another example of the morally reprehensible indiscriminate persecution levelled at advisers.