Compensation for advice misconduct reaches $3.1b
The Big Four banks, AMP and Macquarie have paid or offered a total of $3.1 billion in compensation to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice as at 31 December, 2021.
Almost $1.3bn of this was paid or offered by the institutions between 1 July to 31 December 2021 .
The Australian Securities and Investments Commission (ASIC) reported that AMP, ANZ, CBA, Macquarie, NAB and Westpac undertook the review and remediation programs to compensate affected customers as a result of two major reviews.
ASIC commenced the reviews 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 service; and
- how effectively the institutions supervised their financial advisers to identify and deal with ‘non-compliant advice’ – 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.
Regarding fees for no service misconduct, NAB had paid or offered the most compensation at $1.1 billion to 754,519 customers followed by Westpac at $894 million for 111,284 customers.
Remediation by Macquarie and NAB had been “substantially completed”, ASIC said, while the other firms intended to complete during 2022.
For non-compliant advice, the highest compensation was again paid by NAB at $92.6 million followed by Westpac at $58.3 million while both ANZ and AMP paid $44.7 million and $41.8 million, respectively.
However, Westpac had a higher volume of customers affected at 3,304 compared to NAB’s 2,487.
A breakdown of the compensation payments made or offered by the institution as at 31 December 2021
Source: ASIC
AUTHOR
Oksana Patron
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
