Six of Australia's largest banking and financial services institutions have paid or offered a total of $1.24 billion in compensation, as at 31 December 2020, to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice.
This is an additional $194 million in compensation payments or offers by the institutions from 1 July to 31 December 2020 (Refer 20-193MR).
AMP, ANZ, CBA, Macquarie, NAB and Westpac (the institutions) undertook the review and remediation programs to compensate affected customers聽[i]聽as a result of two major ob体育 reviews. ob体育 commenced the reviews in 2015 to look into:
- the extent of failure by the institutions to deliver ongoing advice services to financial advice customers who were paying fees to receive those services. See Financial advice: Fees for no service (REP聽499); and
- how effectively the institutions supervised their financial advisers to identify and deal with 鈥榥on-compliant advice鈥� 鈥� i.e. personal advice provided to a retail client by an adviser who did not comply with the relevant conduct obligations in the Corporations Act, such as the obligations to give appropriate advice or to act in the best interests of the clients, at the time the advice was given. See 搁别辫辞谤迟听515聽Financial advice: Review of how large institutions oversee their advisers (REP聽515).
The table [ii] below provides a breakdown of the compensation payments made or offered by the institution as at 31 December 2020. 聽
| Institution | Fees for no service misconduct | Non-compliant advice [iii] | ||
|---|---|---|---|---|
| Compensation paid or offered | No. of customers paid or offered compensation | Compensation paid 聽 | No. of customers paid compensation | |
| AMP | $153,782,308 | 207,044 | $33,886,311 | 2289 |
| ANZ | $80,571,500 | 29,307 | $43,181,336 | 2066 |
| CBA | $168,287,728 | 56,438 | $9,354,027 | 626 |
| Macquarie | $4,628,000 | 1,105 | - | - |
| NAB | $437,585,419 | 636,205 | $66,816,471 | 1956 |
| Westpac | $199,216,156 | 44,590 | $42,343,152 | 2211 |
| Total | $1,044,071,112 | 974,689 | $195,581,297 | 9148 |
Background
REP 499
ob体育 released REP 499 in October 2016 describing systemic failures in the advice divisions of AMP, ANZ, CBA and NAB, as well as some of their product issuers. These included the failure to ensure provision of ongoing advice services to customers who paid fees to receive those services (fees for no service), the failure of advisers to provide those services, and the failure of product issuers to switch off advice fees of customers who did not have a financial adviser.
REP 515
ob体育 released REP 515 in March 2017 outlining findings from its review of: 聽
- how AMP, ANZ, CBA, NAB and聽Westpac identified and dealt with non-compliant advice by their advisers聽between 1 January 2009 and 30 June 2015; and
- the development and聽implementation by these institutions of a framework for the large-scale review and remediation of customers who received non-compliant advice聽in the same period.
Since the publication of this report, ob体育 has been monitoring the ongoing implementation of the institutions鈥� customer review and remediation programs.
ob体育 updates on remediation
Refer 20-028MR for ob体育鈥檚 previous update on remediation payments by financial institutions for fees for no service failures and non-compliant advice.
Notes
[i] The institutions do not all hold consistent data for the number of individuals remediated. The term 鈥榗ustomers鈥� broadly refers to individuals, couples or in the case of a self-managed superannuation fund, all trustees of the fund. In some cases, an institution may remediate a customer under more than one remediation program, so the institution may count the customer more than once.
[ii] The data in this table has been compiled by ob体育 from information received from AMP, ANZ, CBA, NAB, Macquarie and Westpac, or their current or former Australian financial services (AFS) licensees.
[iii] For non-compliant advice:
CBA: At 31 March 2020, CBA notified ob体育 that all customers who have been identified as receiving聽 inappropriate advice between 1 January 2009 to 30 June 2015 have been remediated in accordance RG 256 Client review and remediation conducted by advice licensees.
Macquarie: Macquarie has not been included in this review because ob体育 accepted an enforceable undertaking (EU) in January 2013 from Macquarie Equities Limited (MEL), a subsidiary of Macquarie Group. The effect of the EU was for MEL to undertake work that was largely consistent with the aims of ob体育鈥檚 review. Under the consequent remediation program, as at June 2017, MEL paid approximately $24.7 million in compensation to 263 clients (Refer 17-177MR).
IOOF: In October 2018, IOOF Holdings Limited (IOOF) took ownership of ANZ鈥檚 Aligned Dealer Groups (ADGs) comprising Millennium3 Financial Services, RI Advice and Financial Services Partners. IOOF will continue customer review and remediation for non-compliant advice in relation to the ADGs using the same independently assured framework implemented by ANZ.
Editor's note:
On 28 May 2021, ob体育 updated the figures in this statement to reflect that Macquarie had offered a further $426,000 to 67 customers. This change did not affect ob体育鈥檚 statement that the six institutions had paid or offered a total of $1.24 billion in compensation as at 31 December 2020