AMP, ANZ, CBA, NAB and Westpac have now paid or offered customers $222.3 million in refunds and interest for failing to provide advice to customers while charging them ongoing advice fees. This represents a further $6.4m in payments and offers from these institutions since the last ob体育 media release (17-438MR) on the fees for no service (FFNS) project, which provided compensation figures as at 31 October 2017.
In addition, ob体育 is overseeing FFNS remediation programs by other Australian financial services (AFS) licensees that have identified potential FFNS failings, including Bendigo Financial Planning Ltd, Police Financial Services Ltd (trading as BankVic), State Super Financial Services Australia Limited (trading as StatePlus), and Yellow Brick Road Wealth Management Pty Ltd. The total amount now paid or offered to customers across both groups of licensees is $259.6m.
ob体育 is also aware that five AFS licensees or institutions聽have provisioned for future remediation payments, with four of these to date providing to ob体育 amounts for future remediation (see below in notes). If all of these provisions are paid in full, FFNS remediation may exceed $850m.
The table provides compensation payments and estimates reported to ob体育 as at 30 June 2018. Some institutions' total estimates have changed since ob体育鈥檚 previous media release as they have further investigated the compensation required and, in some cases, identified additional failures needing remediation.
|
Group |
Compensation paid or offered (1) |
Estimated future compensation (2) |
Total estimate |
|---|---|---|---|
|
AMP |
$5,010,637 |
$370,000 (3) |
$5,380,637 |
|
ANZ |
$50,793,257 |
$8,443,300 (4) |
$59,236,557 |
|
CBA |
$118,040,178 |
$25,274,717 |
$143,314,895 |
|
NAB |
$5,690,797 |
$1,019,623 (5) |
$6,710,420 |
|
Westpac |
$6,896,237 |
Not yet available (6) |
$6,896,237 |
|
Bendigo |
$0 |
$2,500,000 |
$2,500,000 |
|
StatePlus |
$37,223,999 |
Not yet available (7) |
$37,223,999 |
|
Yellow Brick Road |
$0 |
$101,477 |
$101,477 |
|
Total (personal advice failures) |
$223,655,105 |
$37,709,117 |
$261,364,222 |
|
NULIS Nominees (Australia) Ltd |
$35,900,408 (8) |
67,000,000 (9) |
$102,900,408 |
|
Total (personal and general advice failures) |
$259,555,513 |
$104,709,117 |
$364,264,630 |
Source: Data reported by the AFS licensees to ob体育 as at 30 June 2018.
Table notes
(1)聽聽This includes amounts paid to customers as well as amounts paid to unclaimed monies and charities (for example, where the licensee was unable to contact the customer).
(2)聽聽Some estimates exclude interest. Estimates may change, as each entity further investigates the failures. Some entities do not yet have estimates of future remediation, but have provisioned for (or are in the process of provisioning for) FFNS remediation in their financial statements. The provisions may include amounts already paid.
(3)聽In addition, on 27 July 2018, AMP announced that it has provisioned in relation to potential remediation in relation to ob体育 report 499. AMP has advised ob体育 that its pre-tax estimate for FFNS remediation is $240m, or $360m including interest. This estimate covers all the advice licensees within the AMP group (both the salaried advisers and the aligned dealer groups) and covers remediation for the period up to 31 December 2017.
(4)聽ANZ has advised ob体育 that it has provisioned for FFNS remediation, but has not yet provided details of that provision to ob体育.
(5)聽NAB has provisioned a further $65m across its financial advice licensees relating to FFNS remediation and project costs.
(6)聽Though Westpac has not provided ob体育 with an estimate for future remediation, it informed ob体育 that it has provisioned approximately $24m relating to FFNS remediation for the 2017-18 financial year for Westpac Banking Corporation, of which 3.24m had been paid as at 30 June 2018. This provision does not cover future periods, or other Westpac owned AFS licensees.
(7)聽StatePlus has not provided ob体育 with an estimate of future FFNS remediation. However, it has provisioned a further $53m relating to FFNS remediation, which it expects will cover both further FFNS customer remediation and remediation project expenses.
(8)聽The table shows compensation paid by NAB's superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees. (Other fees referred to in this release relate to personal advice). This remediation was completed in 2017. As announced by ob体育 on 2 February 2017 ob体育 imposed additional licence conditions on NULIS following this and another breach: ob体育 MR 17-022. The failure was by MLC Nominees Pty Ltd and MLC Limited.聽Whilst on 1 July 2016 the superannuation assets governed by MLC Nominees were transferred by successor fund transfer to NULIS, and on 3 October 2016 NAB divested 80% of its shareholding in the MLC Limited Life Insurance business, accountability for this remediation activity (including compensation) remains within the NAB Group.
(9)聽On 26 July 2018 NULIS announced a further remediation program relating to general advice fees. This amount excludes interest.
How to remediate FFNS failures
ob体育 has published an Information Sheet 232 (INFO 232) that sets out ob体育鈥檚 expectations of AFS licensees remediating FFNS breaches.聽
Next steps
ob体育 will continue to monitor the above聽FFNS licensees compensation programs.
In addition, ob体育 will continue to supervise the further reviews for those entities subject to the FFNS project, to determine whether any additional instances of fees being charged without advice being provided are identified. ob体育 expects to publish a media release on their further reviews in the coming months.
Background
In October 2016, ob体育 released Financial advice: fees for no service (REP 499). The report described systemic failures of the advice divisions of the largest banks and AMP, as well as some of their product issuers, to ensure that ongoing advice services were provided to customers who paid fees to receive these services, the failure of advisers to provide such services, and the failure of product issuers to switch off advice fees of customers who did not have a financial adviser.
At the time of the publication of the report compensation arising from the fee-for-service failures reported to ob体育 was approximately $23.7 million, which had been paid, or agreed to be paid, to more than 27,000 customers.
ob体育 has published updates to the above remediation in May 2017 (17-145MR) and in December 2017 (17-438MR).
MoneySmart
Customers who are paying ongoing advice fees for services they do not need can ask for those fees to be switched off. Customers who have paid fees for services they did not receive may be entitled to refunds and compensation, and should lodge a complaint through the bank or AFS聽licensee's internal dispute resolution system or the Financial Ombudsman Service.
ob体育's MoneySmart website explains how customers can check they are . It also has a to help customers navigate the financial advice process and understand what they should expect from an adviser, and useful information about how to .