Only 30% of $5.3 billion of fee-for-no service remediation had been paid customers as at 30 June, 2021, and the corporate regulator believes its “strengthened” guidance will remove the last stumbling blocks from boards to get money back to customers.
Answering questions from during a parliamentary hearing from Labor senator Deborah O’Neill on fee-for-no-service remediation, the Australian Securities and Investments Commission (ASIC) deputy chair, Karen Chester said the regulator was trying to help accelerate some of the remediation programs.
“The biggest stumbling block to the speed has been the systemic under investment in the systems and data by the firms,” Chester said.
“We've given guidance to ensure that they know what to do in areas where the systems and the data are causing problems, and what the benefit of the doubt assumptions are, how far back to review, and expectations around locating and paying impacted customers.
“We're hoping with that guidance, which we're consulting on at the moment, will provide the confidence and speed that's required for those that fairly amounts to be repaid as quickly as possible.”
O’Neill said the lagging firms needed to be penalised as she was “sick and tired of big companies that have failed to invest in the proper resources in the back office to make sure they had detailed information”.
“Using that as an excuse to continue to block the payment that people have a right to expect and deserve, frankly, years ago now. Now that in my view, there should be a penalty.”
Chester said there were penalties under the Corporations Act’s section 912a and that the penalties went to consolidated revenue. She said the firms that had been penalised were “now on notice” and were not doing business in a way that was not efficient, honest, and fair.
“While these continues, even if penalties are raised, that gives more money to the government. For the people who were ripped off, they should have already got their money long ago and they are not getting any additional payment by this delay,” O’Neill said.
“The Government's got a business model where they're making money out of this being delayed. Now, I don't think they would have concocted it that way – I hate to think that they did.
“But the reality is, the longer this goes on the more money goes to the Government and the more people are going to die waiting for it. That is not a good system designed from my point of view.”
Chester noted that the deadlines to pay remediation were set by the boards of the entities and that the regulator hoped with its new guidance it would remove any of the last stumbling blocks in confidence and speed so the boards could get money back to consumers.