Money for nothing: ASIC report finds the big four and AMP are banks behaving badly
The numbers are simply staggering. Almost 200,000 customers have been systemically rorted of an estimated $178 million for financial advice services they never got.
Customers were literally paying their hard earned money for nothing, while the big four banks and AMP raked in the fees.
According to a landmark report by ASIC, the big four banks and AMP have so far paid back $23.7 million to 27,000 customers in fee refunds and compensation for services not rendered. It estimates another $154 million will have to be repaid.
They also show that the financial advice sector still has a long way to go to clean up its act.
"AMP, ANZ, CBA and NAB have all identified systemic issues in relation to the charging of ongoing advice fees. Westpac has also identified a systemic issue but in relation to one adviser only," the report says.
At the time opt-in was being considered as part of FOFA, many institutions were screaming blue murder. They wanted to reintroduce commissions through general advice exemption, remove opt in and didn't want fee disclosure statements and they wanted to water down best interests duty. This was all done through powerful lobby groups, arguing it would be burdensome on customers and cost the industry a fortune in red tape.
The outlier appears to be Commonwealth Bank, which estimates it will be up for $105 million. Photo: Ken Irwin
By the looks of the numbers of customers who were paying for services they never got, FOFA and opt in looks like it was a good thing. Those customers will now be offered a refund with interest and such systemic failures have had to be addressed.
The outlier appears to be Commonwealth Bank, which estimates it will be up for $105 million, followed by ANZ at $49 million. Westpac is yet to give an estimate, while NAB comes in at $16.9 million.
The banks now owe customers roughly $178 million.
The least worst offender is AMP, which has the biggest army of financial planners. It estimates it will have to repay $4.6 million to some of its customers.
This report should be a wake up call to the big four banks. It also raises questions about the integrity of the customer service satisfaction reports being peddled around, which show customer satisfaction is on the rise, regardless of what these institutions might have been caught doing.
ASIC says it has commenced several enforcement investigations in relation to this conduct.
ASIC says it has commenced several enforcement investigations in relation to this conduct. Let's hope this time it goes in hard. It is also time for the boards and the senior executives of these institutions to be held to account. A fish rots from the head down.