‘Fees-for-no-service’ bill soars to $215m

The five major institutions have refunded $215 million in ongoing advice fees


By Sarah Kendell

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The big four banks and AMP have now paid out a total $215.9 million in refunds to customers who were incorrectly charged ongoing advice fees, according to new data released by the corporate regulator.

In an update released on its ‘fees-for-no-service’ project, ASIC indicated the five institutions had paid a further $155 million to customers in the six months to October 2017.

It also revealed the estimations of how much total compensation would need to be paid had increased since its last public update in April, as the institutions had identified new failures.

The Commonwealth Bank of Australia had the highest compensation bill of the five institutions, with more than $119 million now expected to be paid out to customers at the completion of the remediation program.

ANZ’s total bill was almost $50 million, while NAB and AMP would need to pay out $6.7 million and $4.7 million respectively.

ASIC said it would continue to monitor the institutions’ compensation programs as well as supervising future reviews to determine if any further failures were identified, with the next public update to the program to be released in mid-2018.

The data follows the release of ASIC’s Report 499 in October 2016, which revealed systemic failures in the five institutions to ensure that ongoing advice services were being provided to customers who were charged ongoing advice fees.

At the time, the compensation fees owed to customers totalled $23.7 million, but the bill has now ballooned out by $192 million.

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