$21.4 Million Compensation Paid To Customers By Australia''s Five Largest Financial Services Inst.


Tuesday, February 20, 2018  06.33AM / ASIC / Image Source is RAND Corporation 

Australia's five largest banking and financial services institutions have now paid a further $21.4 million in compensation to customers who suffered loss or detriment as a result of non-compliant conduct by financial advisers. 

This compensation relates to advice identified in the ASIC March 2017 Report 515 Financial advice: Review of how large institutions oversee their advisers (REP 515). REP 515 outlined ASIC's observations and findings from its Advice Compliance Project. This additional compensation brings the overall compensation total for matters covered by REP 515 to $51.4 million. 

REP 515 reviewed advice compliance at AMP, ANZ, CBA, NAB and Westpac. In addition to reviewing the effectiveness of adviser oversight, the project reported on work being undertaken by these institutions to identify and compensate customers affected by non-compliant advice provided between 1 January 2009 and 30 June 2015. 

As reported in REP 515, at 31 December 2016, approximately $30 million had been paid (or offered to be paid) by the institutions to approximately 1,347 customers who had suffered loss as a result of advice failings by 97 high risk advisers identified at that time.  

The institutions have since made an additional $21.4 million in payments to more than 1,687 customers. The table below updates the figures that were reported in REP 515 and is current to 31 December 2017. ASIC expects further compensation to be paid, but the amount of compensation and number of potentially affected customers is not known at this stage. 

Compensation Payment Update
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  • Note 1: The data in this table has been compiled and interpreted by ASIC from the information received from the institutions. It relates to the currently identified high-risk advisers whose non-compliant conduct occurred between 1 January 2009 and 30 June 2015. It is current up to 31 December 2017 and differs from REP 515 in that it only includes amounts actually paid to clients.

  • Note 2: The compensation figures are rounded to the nearest dollar.

  • Note 3: An adviser or a customer can appear under more than one compensation type.

  • Note 4: As part of its pilot work under the review and remediation framework developed as part of this project, NAB focused on an adviser whose non-compliant conduct commenced before 1 January 2009. NAB has paid $11,633,831 as compensation to affected customers (as at 31 December 2017). These figures do not appear in this table.

  • Note 5: The figures recorded for CBA do not include compensation amounts paid under its other large-scale remediation programs as noted in 15-083MR, 16-415MR and CBA’s Open Advice Review Program.

  • Note 6: The figures recorded in this table do not include the compensation amounts paid in relation to fees-for-no-service issues, as noted in REP 499 and 17-438MR.

  • Source: Institutions, ASIC 

Remediation program progress update

All institutions are reviewing the advice received by customers of their identified high risk advisers. 

ASIC continues to oversee the implementation and expert assurance of the remediation work undertaken by the institutions.  The institutions are also undertaking, and seeking expert assurance of, work to identify any high-risk advisers not identified by their previous monitoring and supervision processes. 

ASIC committed to providing regular reports on the progress of the remediation being made to customers who suffered a loss or detriment. 

In addition, ASIC has ongoing investigation or surveillance activities in relation to more than 50 individual advisers within the scope of the work in REP 515. ASIC will publicly report on the outcomes from these activities as they progress. 

As at 31 January 2018, ASIC has publicly reported upon regulatory outcomes achieved in relation to 42 advisers who fall within the scope of the work in REP 515.  

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