Big banks to refund $204 million to customers
AMP, ANZ, CBA, NAB and Westpac have repaid over $60 million for charging customers fees with no service.
The Australian Securities and Investments Commission (ASIC) today provides an update on the compensation outcomes of it’s Financial advice: fees for no service report released in October 2016.
Last year, ASIC released a report detailing the extent to which the big banks had charged ongoing fees to customers without providing the advice services the fees were attributed to.
That is, the extent to which AMP, ANZ, CBA, NAB and Westpac had continued to charge customers fees for providing general or financial advice, despite the fact that they were not giving this advice.
ASIC’s update today shows that the big four banks and AMP have so far repaid over $60 million in compensation to around 45,000 affected customers, with total estimations for compensation now over $204 million plus interest.
At the time the initial report was released, the institutions’ estimates of total required compensation was estimated at $200 million, however this has now increased by around 15%.
ASIC today released the below breakdown of compensation payments by each institution as at 21 April 2017. The data is based on estimations provided to ASIC by the institutions.
| Group | Compensation paid or offered | Estimated future compensation (excludes interest) | Total (estimate, excludes interest) |
|---|---|---|---|
| AMP | $3,816,327 | $603,387 | $4,419,714 |
| ANZ | $43,818,571 | $8,613,001 | $52,431,572 |
| CBA | $5,850,827 | $99,786,760 | $105,637,587 |
| NAB | $4,641,539 | $385,844 | $5,027,383 |
| Westpac | $2,670,479 | Not yet available | $2,670,479 |
| Total (personal advice failures) | $60,797,743 | $109,388,992 | $170,186,735 |
| NULIS Nominees (Australia) Ltd (1) | Nil | $34,720,614 | $34,720,614 |
| Total (personal and general advice failures) | $60,797,743 | $144,109,606 | $204,907,349 |
Source: ASIC
CBA has the largest compensation program, estimated at $105 million plus interest, primarily relating to Commonwealth Financial Planning (CFPL) and its failure to provide CFPL customers ongoing advice.
ANZ’s total compensation estimate has increased from $49.7 million to $52.4 million as it identified further failures across the business, with the largest component of compensation relating to fees for its Prime Access service.
Since the release of ASIC’s original report in October 2016, NAB has reported a further 3,000 customers affected by the lack of ongoing advice.
Westpac has the lowest estimated compensation program, with the bank already refunding over $2.6 million to affected customers. However, unlike the other banks, Westpac has not yet provided ASIC with an updated estimation of additional customers affected.
A subsequent update will be provided by ASIC later this year.
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