The corporate watchdog has revealed nine in 10 financial advice deals it has investigated were not in the interest of consumers, in another blow to the integrity of the advice industry.
Appearing before the banking royal commission on Monday, ASIC deputy chair Peter Kell said 90 per cent of deals “didn’t comply with best interest duties”. That, he said, was “very disappointing.”
Mr Kell also told the commission ASIC had insufficient powers to force financial advice groups to make good to ripped-off clients.
“ASIC would like to have direct powers to imposed remediation programs appropriate in these instances,” he said.
In response to a question from Commissioner Kenneth Hayne, Mr Kell said the problem faced by ASIC was that financial adviser groups had been “selling what they don’t deliver”.
The big four banks and AMP will have to pay $218.93 million in compensation to clients that have been damaged by their misconduct after earlier paying hundreds of millions for misdeeds that have already been settled, the commission also heard.
The financial services sector has already paid $383.11 million in compensation to customers damaged by financial advice industry since 2008, the royal commission heard.
Payment of the money now due will bring the total in compensation for dodgy financial advice to over $600 million in the last 10 years.
Mr Kell told the commission that the payments were recompense for financial loss caused by the industry through poor advice or as a return of fees charged for services never delivered.
ASIC figures show that compensation had been paid or agreed to by 305,946 customers of financial advice groups and that $216.42 million had been paid to customers of the big five financial services groups for compensation over fees paid for no service provided.
Of the total, CBA has paid the most, with $117.8 million in compensation to its clients. The ANZ has paid $49.3 million while $41.31 million has been paid by NAB. AMP has paid $4.71 million and Westpac has paid $3.27 million.
ASIC also told the commission that since 2008 it has obtained 60 enforceable undertakings from financial services companies over misconduct and achieved 39 negotiated outcomes with adviser groups. It has cancelled 116 licenses held by shonky advisory groups and suspended 27 more.
The regulator has also banned 387 individual advisors and issued 14 infringement notices which have involved the payment of $149,000 in penalties.
Civil action against miscreant advisory groups have yielded $23.6 million in penalties and led to the commencement of 50 criminal actions. Only two criminal prosecutions have been achieved over such breaches.