The corporate regulator has slammed Australia’s major banks for failing to complete further investigations into fees charged to customers who did not receive the services they paid for.
The fees-for-no-service scandal was like “taking money for nothing”, banking royal commissioner Kenneth Hayne said.
The scandal included customers being charged ongoing fees by financial advisers – despite not even receiving a yearly review – as well as charges to accounts after customers had died.
ASIC on Monday said the big four banks and AMP are expected to pay more than $1.15 billion in compensation, including about $350 million already paid or offered to customers.
The total compensation bill could rise as the institutions have not yet completed their reviews into the full scope of fees for no service beyond the instances already reported to ASIC since 2013.
The corporate regulator said the delay was unreasonable.
“ASIC acknowledges that they are large-scale reviews. They relate to systemic failures over long periods, with reviews going back six to 10 years and cover 36 licensees from the six institutions that currently authorise more than 7000 advisers,” ASIC commissioner Danielle Press said.
“However, we believe the institutions have failed to sufficiently prioritise and resource their reviews.”
Ms Press said the delays were down to poor record-keeping and systems, a failure to meet ASIC’s expectations of how customers should be identified and compensated and an overly legalistic approach by some banks.
The regulator released detailed report cards calling out the failings of the individual institutions.
AMP estimates it will complete its review and the resulting compensation in the second half of 2021, but is yet to provide details for how it will deal with financial advisers who have left the firm.
ANZ has not provided any estimated time frame.
Macquarie expects to wrap up its remediation program mid year, but ASIC is unhappy with the rate it is proposing to pay customers to compensate for lost earnings.
NAB and Westpac were each called out for failing to provide an estimated completion date or methodology for the review of some of their subsidiaries.
The Commonwealth Bank has completed its reviews but now intends to undertake another. For a number of divisions, the review will cover a timeframe less than the seven years recommended by ASIC.
The regulator also confirmed that its investigations are ongoing and said it “plans to take enforcement action against licensees that have engaged in misconduct”.
In the banking royal commission’s final report, Commissioner Hayne said he had informed ASIC in November that at least two entities may have broken the law by engaging in dishonest conduct by charging fees for no service, and “invited” the regulator to consider whether it should begin criminal or other legal proceedings.
The commissioner singled out former NAB chief executive Andrew Thorburn for treating fees for no service as “nothing more than carelessness combined with system deficiencies”, in a damning assessment that cost him his job within the week.
ASIC commenced proceedings against NAB’s superannuation trustees NULIS and MLC Nominees in September, alleging $100 million in fees were wrongly charged to hundreds of thousands of fund members.