Financial services giants fork out $5bn for advice remediation

The Australian Securities and Investments Commission (ASIC) has issued a final update on the progress of remediation associated with misconduct in the financial advice space.

This included fees for no service claims and consumer harm caused by non-compliant advice.

Specifically, off the back of revelations exposed during the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry, ASIC investigations explored:

• the extent of failure by the institutions to deliver ongoing advice services to financial advice customers who were paying fees to receive those services;
• how effectively the institutions supervised their financial advisers to identify and deal with ‘non-compliant advice’.

The corporate regulator reported as at 31 December 2022, a total of $4.7 billion in compensation had been paid or offered to approximately 1.6 million consumers.

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Roughly 23% ($1.1 billion) was paid or offered in the six months from July to December 2022.

Remediation was paid by six of the country’s largest financial services firms — AMP, ANZ, Commonwealth Bank, Macquarie Group, NAB, and Westpac.

NAB had the largest remediation bill, paying or offering just under $1.4 billion to almost 800,000 customers.

Commonwealth Bank was the only other firm with a multimillion-dollar remediation bill ($1.1 billion to 250,000 customers), with Westpac close behind ($930 million to 119,000 customers).

Meanwhile, AMP offered or paid over $636 million to more than 340,000 customers, while ANZ forked out $308 million to 79,600 advice customers.

Of the six entities, Macquarie had the smallest remediation bill, paying or offering $4.6 million to 1,105 affected customers.

“ASIC compensation for financial advice related misconduct project has shone a light on the advice fees that customers are paying and the services they should be receiving in return,” Commissioner Danielle Press said.

“The subsequent programs have resulted in very significant remediation payments to affected consumers.”

ASIC was not expected to release additional updates on the progress of advice remediation, claiming “most of these programs are substantially complete”.

However, the watchdog stressed it would continue monitoring the implementation and finalisation of remaining programs.

“While this final update on remediation figures draws a line under this program of work — following eight years of addressing financial institutions' and advisers' failure to provide ongoing services to fee paying customers — we will continue to monitor institutions’ processes to complete ongoing work in this area," Commissioner Press added.