ASIC warns major banks’ fees-for-no-service reviews are incomplete and delayed

Maria Nikolova

Most of the institutions are yet to complete reviews to identify systemic FFNS failures beyond those already identified and reported to ASIC since 2013.

The Australian Securities & Investments Commission (ASIC) has earlier today published an update on review programs undertaken by AMP, ANZ, CBA, Macquarie, NAB and Westpac regarding fees-for-no-service (FFNS) failures.

ASIC warns that that most of the institutions are yet to complete reviews to identify systemic FFNS failures beyond those already identified and reported to ASIC since 2013. The reports are delayed and incomplete, the regulator warns.

ASIC Commissioner Danielle Press commented:

“These reviews have been unreasonably delayed. 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 7,000 advisers However, we believe the institutions have failed to sufficiently prioritise and resource their reviews, particularly as ASIC advised them to commence the reviews in mid-2015 or early 2016”.

Some of the main reasons for delays by the institutions include poor record-keeping and systems within the institutions, which mean that in many cases they have been unable to access customer files for review, or failures by some institutions to implement customer-centric methodologies to identify and compensate customers. Also, some institutions have taken a “legalistic approach” to determination of the services they were required to provide.

ASIC’s FFNS supervisory work includes overseeing the institutions’ programs to compensate customers impacted by the reported failures to provide advice services paid for by customers, as well as the institutions’ reviews to determine if there were further systemic FFNS failures on top of those already identified and reported to ASIC.

Under the compensation programs, AMP, ANZ, CBA, NAB and Westpac have collectively paid or offered about $350 million in compensation to customers who were charged financial advice fees for no service at the end of January 2019. Additionally, the institutions have provisioned more than $800 million towards potential compensation for further systemic FFNS failures. However, these reviews are incomplete.

Let’s recall that, since 2014, ASIC has supervised the FFNS compensation programs of 32 Australian financial services (AFS) licensees. As at end-January 2019, the licensees have paid or offered about $316 million in FFNS compensation to more than 120,000 customers who were charged fees for personal advice. Of this, some $235 million has come from licensees owned by the institutions. Separately, NAB’s superannuation trustee, NULIS Nominees (Australia) Ltd, has paid or offered over $116 million in relation to ‘plan service fees’ for general advice.

Along with supervision of the compensation programs and further reviews undertaken by the institutions, ASIC is also carrying out a number of FFNS investigations and plans to take enforcement action against licensees that have engaged in misconduct.

The regulator says it will continue to supervise and report on the institutions’ further reviews into FFNS failures.

Read this next

Technology

Spotware Systems unveils version 4.4 of Desktop and Web terminals

Spotware Systems, a technology provider for the electronic trading industry, has launched updated versions of its cTrader Desktop and Web terminals, which add new functionality to join a roster of advanced trading capabilities.

Institutional FX

Integral reports best monthly FX volume in 6 months

Currency trading on Integral’s platforms rose in September to its highest levels since March 2022 as increased volatility across financial markets led to greater activity on institutional FX venues.

Retail FX

OctaFX pre-launches new trading platform as MT4 and MT5 remain suspended by Apple

Like many other brokers within the FX and CFD industry, OctaFX had all its eggs in one basket, MetaQuotes, only offering access to MetaTrader 4 and MetaTrader 5. OctaTrader will provide the much needed change.

Opinion

Is the Bank of England facing another storm? Op-Ed by Stuart Cole, macro economist at Equiti Capital

An analysis and opinion editorial by Stuart Cole, macro economist at Equiti Capital, 3 October 2022 on what triggered the UK gilt market sell-off and is the Bank of England facing another storm?

Industry News

Kim Kardashian fined $1 million for touting EMAX tokens on social media

“Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”

Retail FX

INFINOX launches IX Exchange platform with +20,000 markets in UK

“The launch of IX Exchange is a statement of intent for our growth strategy and a game-changer for our clients’ trading potential.”

Retail FX

Saxo issues gloomy report for Q4 2022 and beyond

Globalisation was the biggest driver behind low inflation over the past 30 years and instrumental for emerging markets and their equity markets. Globalisation in reverse will cause turmoil for trade surplus countries, put upward pressure on inflation and threaten the USD as the reserve currency.

Executive Moves

ICE appoints Caterina Caramaschi to oversee interest rates and equity derivatives

“As the head of a product set covering some of the biggest interest rate and equity derivative benchmarks, at a time when investor’s priorities are firmly focused on interest rate changes and the outlook for global economies, Caterina’s two decades of financial market experience, and the relationships cultivated during that, will be invaluable in developing these products to the benefit of our customers.”

Retail FX

Plus500 sponsors Chicago Bulls ahead of trading platform launch in United States

Plus500 has signed a major multi-year sponsorship deal to become an official global partner of iconic NBA team Chicago Bulls. 

<