Fee-for-no service (FFNS) accounts for the bulk of compensation paid for misconduct by the six largest banking and financial services to customers at $607.85 million, and another $141.87 million for non-compliant advice, according the corporate watchdog’s data.
In an announcement, the Australian Securities and Investments Commission (ASIC) found that the Commonwealth Bank had paid or offered the most in compensation for FFNS at $164.86 million to 50,576 customers, as at 31 December, 2019.
The bank had paid out $9.39 million to 628 customers for non-compliant advice.
The second largest amount of payment or offer of payment for FFNS was NAB at $163.86 million to 586,961 customers. It had paid out $39.94 million to 1,294 customers for non-compliant advice so far.
AMP came in at third for FFNS compensation where it had paid or offered $140.5 million to 193,167 customers. For non-compliant advice it had paid $26.66 million in compensation to 1,987 customers.
Institution | Non-compliant advice | FFNS misconduct | ||
| Compensation paid | No. of customers paid compensation | Compensation paid or offered | No. of customers paid or offered compensation |
AMP | $26,654,023 | 1,987 | $140,459,870 | 193,167 |
ANZ | $36,205,259 | 1,777 | $59,415,383 | 21,184 |
CBA | $9,386,454 | 628 | $164,846,374 | 50,576 |
Macquarie | Not applicable | Not applicable | $2,583,645 | 734 |
NAB | $39,944,208 | 1,294 | $163,862,768 | 586,961 |
Westpac | $29,680,142 | 1,365 | $76,686,356 | 19,441 |
Total | $141,870,086 | 7,051 | $607,854,395 | 872,063 |
Source: ASIC
Comments
Considering the number of clients compensated by NAB, it is likely the others have a long way to go yet.
Not sure - NAB hasn't even started down it's aligned licensee's yet but it's coming. Then it will move the down the dealer ladder size by size all the way through.
They should stop calling it “fee for no service” when companies like AMP are refunding thousands of clients millions of dollars without even checking if service was provided. Any client who was paying under $400 per year are being refunded automatically. Many businesses were servicing these clients regularly and this should be noted.
Exactly. But there is a bigger issue here. If CBA, AMP etc want to spend millions on a PR campaign under the misleading name of "fee for no service" then that's their commercial decision. But in doing so, they are often besmirching the reputation of the adviser who actually provided the service.
CBA, AMP etc should also be paying compensation to the advisers they have defamed by falsely claiming service wasn't provided.
And who pays? The institution, the PI insurance or will they go after the advisers?
The adviser. PI insurers will have a legal out - no service. The institutions will also claim a legal out, even though they monitor the adviser, they aren't responsible for all the actions of the adviser, including non provision of service. And then what is service? ASIC's view is that unless an SOA or a Review ROA, a physical document, was given to the client in any given year, then that is no service and the fee needs to be refunded.
Is that really ASIC's view? Or is that the justification used by the big insto compliance departments to pay out "remediation" for PR purposes. In large licensees much of what the compliance department forces advisers to do "because it's the law" or "because ASIC requires it" is not legally required at all. Thanks to the FASEA exam study requirements, many advisers are now finding this out for the first time.
If licensees want to pass the cost of "fee for no service remediation" onto advisers or PI insurers, they will need to prove no service was provided. That requires much more than a cursory glance through a file by a compliance bureaucrat who is completely unfamiliar with each client's specific situation.
Good point - I can only say that the Licensees are saying that this ASIC"s guidance/rule - but I'd like to see the correspondence from ASIC to the Licensee before I accepted that that is the guide I'm being subjected to!
Most PDSs state that these fees are for ongoing advice and associated services (not just ongoing advice, and certainly not just the production of an advice document every 12 months). Whilst we can't change ASIC's view, there may be a possibility that the product manufacturers issued deceptive and misleading PDSs and we have recourse? Not their fault, ASIC only decided to clarify their view after a couple of decades, but if we are looking at everything with retrospective lenses, why not this too?
Good point.
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