ANZ, NAB, CBA, Westpac and AMP licensees have been obliged to pay approximately $23.7 million of fee refunds and compensation to over 27,000 customers for charging advice fees without actually providing financial advice.
The figures have been revealed today by the Australian Securities and Investments Commission (ASIC), which released report "Report 499 Financial advice: Fees for no service", which provides an update on ASIC's work to address financial institutions' and advisers' systemic failures, over a number of years, to provide ongoing advice services to customers who paid fees to receive those services.
It said further reviews were being conducted by the licensees to determine the extent of their ongoing service fee failures.
"Refunds and compensation are expected to increase substantially as the licensees' investigations and reviews continue," it said.
"Based on estimates provided by the licensees to ASIC, compensation may increase by approximately $154 million, plus interest, to over 175,000 further customers, meaning that total compensation for related failures could be over $178 million, plus interest."
The regulator said it had commenced several enforcement investigations in relation to the conduct but conceded that most of the failures outlined in the report occurred before the commencement of the Future of Financial Advice (FOFA) reforms.
It said the changes made by those reforms were a significant factor in the identification of the failures, and also substantially reduced the likelihood that the type of systemic failures described in this report would occur in the future.
"In particular, the requirement to now provide an annual fee disclosure statement to the client, and the requirement for the client to 'opt-in' to the advice relationship every two years, will significantly reduce the risk of fees being charged without any advice service provided," the ASIC report said.