ASIC update on compensation by institutions for poor financial advice

Australia’s five largest banking and financial services institutions have paid a total of $119.7 million in compensation as at 30 June 2019 to customers who suffered loss or detriment because of non-compliant advice given by financial advisers.

The total compensation paid by AMP to 1903 customers in regards to conduct by 32 advisers is $24,854,075, ANZ paid  $26,712,367 to 1357 customers in regards to conduct by 34 advisers, the corresponding figures for CBA’s 853 customers and 21 advisers is $9,269,005, NAB paid 1032 customers a total of $32,432,131 for the action of 81 advisers and Westpac $26,494,266 to 1173 customers due to 44 advisers.

This compensation has been paid under review and remediation programs initiated as a result of the ASIC review reported on in Report 515 Financial advice: Review of how large institutions oversee their advisers. The report outlined findings from ASIC’s review of how effectively the banks and financial services institutions supervised their financial advisers.

The review, which commenced in July 2015, focused on:

  • how AMP, ANZ, CBA, NAB and Westpac identified and dealt with non-compliant advice by their advisers between 1 January 2009 and 30 June 2015;
  • the development and implementation by these institutions of a framework for the large-scale review and remediation of customers who received non-compliant advice between 1 January 2009 and 30 June 2015; and
  • a review of Australian financial services (AFS) licensees, selected from within the institutions, to test their current processes for monitoring and supervising their advisers.

The company regulator has been monitoring the ongoing implementation and expert assurance of the institutions’ customer review and remediation programs. Earlier this year ASIC released an update on the fees for no service (FFNS) further review programs undertaken by the institutions.