'Unreasonably delayed': Banks hit again over fees for no service
The corporate regulator has slammed Australia's biggest banks over how long it is taking to repay customers ripped off in the $1.5 billion fee-for-no-service scandal.
The Australian Securities and Investments Commission (ASIC) began an investigation into the fees charged by the wealth management arms of the big four banks, AMP and Macquarie six years ago.
The regulator said on Monday that most of the institutions involved were yet to complete further reviews beyond the failures identified in 2013.
The issue was one of the biggest uncovered during last year's banking royal commission, with Commonwealth Bank of Australia singled out as the "gold medallist" for charging for services it knew customers could not receive. CBA and others including National Australia Bank and AMP were caught out for levying fees for financial planning services to customers who had died.
According to ASIC, six years after the issue was first self-reported by the banks to ASIC, only Macquarie and Westpac had conducted a full review to determine which customers were charged fees for no service.
ASIC commissioner Danielle Press said the institutions had taken too long to conduct their reviews, and welcomed the government’s commitment to give the regulator new directions powers that could speed up remediation programs in future.
'These reviews have been unreasonably delayed," she said.
"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 7000 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."
ASIC said some of the delays had been caused by poor record-keeping within the banks, meaning that often the banks were unable to find or access customer files for review.
These reviews have been unreasonably delayed.
Danielle Press, ASIC Commissioner
Some of the other banks' payouts had been delayed because ASIC had rejected the methodology they put forward to identify and repay customers as it felt it would deliver an unsatisfactory outcome for consumers. This included at least one bank, which sources said was NAB, pushing to allow its clients to "opt in" to a compensation program rather than refunding the fees.
The legalistic approach taken by the banks to define what a service was and also to determine whether a service was delivered has also slowed down remediation to customers, ASIC said.
More to come