National Australia Bank (NAB) and ANZ have seen their client compensation bills increase under the Australian Securities and Investments Commission’s (ASIC’s) so-called “fees for no service” program as further shortcomings have been identified.
What is more, NAB has had to pick up the compensation bill for shortcomings relating to its superannuation business even though it was the subject of the transaction which saw NAB divest 80 per cent of its MLC Life business to Nippon Life.
ASIC announced last week that AMP, ANZ, Commonwealth Bank, NAB and Westpac have so far repaid more than $60 million of an expected $200 million-plus total in refunds and interest for failing to provide general or personal financial advice to customers while charging them ongoing advice fees.
According to the ASIC announcement, AMP's total compensation estimate decreased from $4.6 million to $4.4 million as AMP reviewed customer files and data to determine compensation required, and revised its previous estimates, while ANZ’s total compensation estimate increased from $49.7 million to $52.4 million due to the expansion of existing compensation programs “and the identification of further failures by authorised representatives of two ANZ-owned advice businesses – Financial Services Partners Pty Ltd; and RI Advice Group Pty Ltd”.
The regulator said the largest component of ANZ's compensation program related to fees customers were charged for the Prime Access service, where ANZ could not find evidence of a statement of advice or record of advice for each annual review period.
“In addition, ANZ found that further compensation of approximately $7.5 million is required to be paid to ANZ Prime Access customers for ANZ's failure to rebate commissions in line with its agreement with customers,” it said.
ASIC said that since its original report in April, NAB had reported the further erroneous deduction of adviser service fees for personal advice from more than 3,000 customers of its licenses, Apogee Financial Planning, GWM Adviser Services, MLC Investments Limited, NAB and its superannuation trustee, NULIS.
The ASIC announcement noted the expected compensation of approximately $34.7 million NULIS for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees, adding that “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 per cent of its shareholding in the MLC Limited Life Insurance business, accountability for this remediation activity (including compensation) remains within the NAB Group.
The ASIC report also pointed out that while Westpac originally identified a systemic fees-for-no-service issue in relation to one adviser only, with compensation of $1.2 million paid in relation to those failures, “following further ASIC enquiries, Westpac subsequently clarified that it has paid further compensation of approximately $1.4 million to 161 customers of that adviser and 14 further advisers, in respect for fee-for-no-service failures in the period 1 July 2008 to 31 December 2015”.