Shoddy financial advice has cost Australia’s marquee institutions a combined A$4.7 billion in a final remediation bill totted up by the regulator last week.
The just-released Australian Securities and Investments Commission (ASIC) figures show the six flagship financial firms collectively coughed-up A$1.1 billion over the last half of 2022, ending years of compensation claims over charging fees-for-no-service and offering non-compliant advice.
ASIC has been pursuing the four big Australian banks along with AMP and Macquarie for payback for about eight years after a series of reviews found major failures in financial advice practices across the businesses.
The 2018/19 Australian Royal Commission into financial services highlighted many of the most egregious faults but the ASIC actions began prior to the government enquiry.
National Australia Bank tops the ASIC compo bill after paying more than A$1.4 billion – or about a third of the total – followed by the Commonwealth Bank of Australia (circa A$1.2 billion) and Westpac (A$1 billion).
AMP (A$700 million), ANZ (A$350 million) and Macquarie (A$4.7 million) round out the remediation expenses that affected almost 1.6 million underlying customers.
In a release, ASIC commissioner, Danielle Press, said: “‘ASIC compensation for financial advice related misconduct project has shone a light on the advice fees that customers are paying and the services they should be receiving in return,’ said Commissioner Press. “The subsequent programs have resulted in very significant remediation payments to affected consumers.
ASIC anticipates this will be the final update on compensation because most of these programs are substantially complete. ASIC will continue to monitor the implementation and finalisation of remaining programs.”
However, the A$4.7 billion remediation cost excludes the raft of fines, legal expenses and related imposts that Australian financial institutions have copped in the wake of the Royal Commission and other regulatory investigations in recent years.
All Australian banks have since divested their third-party financial advice brands purchased in an orgy of merger and acquisition activity during the early years of this century.