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ASIC update: Compensation for financial advice related misconduct as at 31 December 2021

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Six of Australia’s largest banking and financial services institutions have paid or offered a total of $3.15billion in compensation, as at 31 December 2021, to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice.

This includes almost $1.3bn paid or offered by the institutions between 1 July to 31 December 2021 (refer 21-203MR).

AMP, ANZ, CBA, Macquarie, NAB and Westpac (the institutions) undertook the review and remediation programs to compensate affected customers [i] as a result of two major ASIC reviews (refer Background). 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 services. See Report 499 Financial advice: Fees for no service (REP 499), 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. See Report 515 Financial advice: Review of how large institutions oversee their advisers (REP 515).

The table [ii] below provides a breakdown of the compensation payments made or offered by the institution as at 31 December 2021.

Institution Fees for no service misconduct [iii] Non-compliant advice [iv]
Compensation paid or offered No. of customers paid or offered compensation Compensation paid

 

No. of customers paid compensation
AMP $579,664,727 319,269 $41,783,151 2,852
ANZ $123,965,993 40,137 $44,700,475 2,123
CBA $173,848,961 62,942 $9,354,027 626
Macquarie $4,628,000 1,105
NAB $1,127,275,888 754,519 $92,640,433 2,487
Westpac $894,957,011 111,284 $58,336,899 3,304
Total $2,904,340,579 1,289,256 $246,814,985 11,392

Background

REP 499

ASIC released REP 499 in October 2016 describing systemic failures in the advice divisions of AMP, ANZ, CBA and NAB, as well as some of their product issuers. These included the failure to ensure provision of ongoing advice services to customers who paid fees to receive those services (fees for no service), the failure of advisers to provide those services, and the failure of product issuers to switch off advice fees of customers who did not have a financial adviser.

REP 515

ASIC released REP 515 in March 2017 outlining findings from its review of:

  • how AMP, ANZ, CBA, NAB and Westpac identified and dealt with non-compliant advice by their advisers between 1 January 2009 and 30 June 2015; and
  • the development and implementation by these institutions of a framework for the large-scale review and remediation of customers who received non-compliant advice in the same period.

Since the publication of this report, ASIC has been monitoring the ongoing implementation of the institutions’ customer review and remediation programs.

ASIC updates on remediation

Refer 21-203MR, for ASIC’s last update on remediation payments by financial institutions for fees for no service failures and non-compliant advice.

Notes:

[i] The institutions do not all hold consistent data for the number of individuals remediated. The term ‘customers’ broadly refers to individuals, couples or in the case of a self-managed superannuation fund, all trustees of the fund. In some cases, an institution may remediate a customer under more than one remediation program, so the institution may count the customer more than once.

[ii] The data in this table has been compiled by ASIC from information received from AMP, ANZ, CBA, NAB, Macquarie and Westpac, and their current and/or former Australian financial services (AFS) licensees.

[iii] For Fees for No Service

The compensation paid or offered for FFNS misconduct includes some payments to unclaimed money and charities, for example in respect of customers who the institutions could not contact.

Institutions’ expected substantial completion dates for remaining FFNS programs

Institution Advice businesses included Institutions’ expected completion date (based on information provided to ASIC by the institutions)
AMP AMP Financial Planning Pty Ltd, Charter Financial Planning Ltd, Hillross Financial Services Ltd and 14 other advice licensees. Q1 2022
ANZ Financial Services Partners Pty Ltd, Millennium3 Financial Services Pty Ltd, RI Advice Group Pty Ltd July 2022
CBA Count Financial Ltd, Financial Wisdom Ltd, ‘Pathways’ division of Commonwealth Financial Planning Ltd December 2022
Macquarie Macquarie has substantially completed its FFNS remediation program Substantially completed
NAB NAB Financial Planning, NAB Private Wealth: NAB has substantially completed its FFNS remediation program for these businesses Substantially completed
NAB Apogee Financial Planning Ltd, Godfrey Pembroke Ltd, GWM Adviser Services Ltd, Meritum Financial Group Pty Ltd (NAB AP) September 2022
NAB JBWere Ltd October 2022
Westpac Magnitude Group Pty Ltd, Securitor Financial Group Pty Ltd, Westpac Banking Corporation March 2022

[iv] For non-compliant advice:

CBA: At 31 March 2020, CBA notified ASIC that all customers who have been identified as receiving inappropriate advice between 1 January 2009 to 30 June 2015 have been remediated in accordance RG 256 Client review and remediation conducted by advice licensees.

ANZ: at 30 June 2021, ANZ notified ASIC that all customers who have been identified as receiving inappropriate advice between 1 January 2009 to 30 June 2015 have been remediated in accordance in accordance RG 256 Client review and remediation conducted by advice licensees.

Macquarie: Macquarie has not been included in this review because ASIC accepted an enforceable undertaking (EU) in January 2013 from Macquarie Equities Limited (MEL), a subsidiary of Macquarie Group. The effect of the EU was for MEL to undertake work that was largely consistent with the aims of ASIC’s review. Under the consequent remediation program, as at June 2017, MEL paid approximately $24.7 million in compensation to 263 clients (Refer 17-177MR).

IOOF: In October 2018, IOOF Holdings Limited (IOOF) took ownership of ANZ’s Aligned Dealer Groups (ADGs) comprising Millennium3 Financial Services, RI Advice and Financial Services Partners. IOOF will continue customer review and remediation for non-compliant advice in relation to the ADGs using the same independently assured framework implemented by ANZ.

This news item was originally published by the Australian Securities and Investments Commission (ASIC AU). For more information, please see the Source Link.

Regulator Information

Abbreviation: ASIC
Jurisdiction: Australia

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