Which banks are paying compensation to investors?
Banks and financial institutions will pay about one billion dollars in total compensation to investors and customers for various breaches of the laws and standards stretching back more than 10 years.
Commonwealth Bank, ANZ, NAB, Westpac and AMP have paid out almost $120 million in total compensation payments to investors who received 'non-compliant' financial advice.
More than $350 million has already been paid out by AMP, ANZ, CBA, NAB, Westpac, Yellow Brick Road, Bendigo Bank, Police Bank and three other smaller financial institutions to customers who were charged financial advice fees for no service with a total of $800 million budgeted for this remediation program.
NAB's super trustee has already paid out $35 million to 220,000 investors who were charged fees incorrectly and $1.8 million to 10 customers who had insurance claims wrongly assessed.
Only Commonwealth Bank, which has been stung previously by regulators and has been paying compensation to investors over various matters for the last few years, is nearing the end of its remediation program.
In 2014 ASIC found that Commonwealth Bank's $52 million compensation program for investors who received bad advice had "inconsistency and deficiencies."
ASIC ordered a new investigation and Commonwealth Bank agreed to offer up to $5,000 to more than 4,000 investors to pay for a financial advice review.
More compensation will be coming as the banks continue to comb through their records and identify victims of non-compliant advice said the Australian Securities and Investments Commission in a statement issued today.
Why are banks paying compensation for bad advice?
The 'non-compliant advice' compensation program arose out of an ASIC investigation that reported in 2017 and covered a period stretching back to 2009.
Since 2012 various new laws have addressed concerns about standards in the financial advice industry including the Future of Financial Advice (FOFA) laws in 2012. The FOFA law introduced a requirement for advisers to act in the best interests of their clients (subject to qualifications), enhanced the powers of regulators and created annual fee disclosure and bi-annual opt-in advice agreements, among other reforms.
Financial advisers must now be listed on ASIC's Financial Adviser register.
Despite these steps forward, ASIC has issued a statement saying past misdeeds will not be swept under the rug.
"More reforms are being introduced, including improvements to professional standards for advisers.
"These reforms will help to improve customer outcomes in the future," said the ASIC statement.
"However, we also consider it important that past misconduct is effectively addressed."
Right now, the big five banks have assigned hundreds of employees to identify and repay investors who were charged for bad advice.
AMP and subsidiary advice companies
AMP has paid almost $25 million to 1903 investors who received bad advice from 32 AMP advisers, according to a statement released by the Australian Securities and Investments Commission. AMP has assigned 143 staff to identify victims and repay them.
The AMP remediation program for non-compliant advice covers customers of the following AMP owned financial advice firms:
- AMP Direct
- AMP Financial Planning
- Charter Financial Planning
- Forsythes Financial Services
- Genesys Wealth Advisers
- Hillross Financial Services
- IPAC Securities
- King Financial Services
- PPS Lifestyle Solutions
- Quadrant Securities
- SMSF Advice
- Strategic Planning Partners
- TFS Financial Planning
- Total Super Solutions
- Tynan Mackenzie
Commonwealth Bank and subsidiary financial advice firms
Commonwealth Bank has just two staff working on their remediation program now. Commonwealth Bank have paid $9.3 million to 853 customers who received bad advice from 21 advisers. Commonwealth Bank expect to complete all compensation payments by the end of August 2019.
The Commonwealth Bank remediation program for non-compliant advice covers customers of the following CBA owned financial advice firms:
- Commonwealth Financial Planning
- Financial Wisdom
- BW Financial Advice
- Count Financial
- Commonwealth Private
- Commonwealth Securities
ANZ Bank and subsidiary financial advice firms
ANZ have 89 staff working to repay customers of non-compliant advice. ANZ have paid 1357 people a total of $26.7 million.
ANZ's program also covers the following subsidiary financial advice firms:
- Financial Services Partners
- Millennium 3 Financial Services
- RI Advice Group
NAB and subsidiary financial advice firms
National Australia Bank have paid $32.4 million to 1032 customers who got bad advice from 81 NAB advisers. National Australia Bank have also paid an additional $14 million in compensation for non-compliant advice provided by just one adviser, reported ASIC. NAB have 573 staff working on this project.
NAB's compensation program covers the following subsidiary firms:
- GWM Adviser Services
- Apogee Financial Planning
- Godfrey Pembroke
- Meritum Financial Group
- JB Were Limited
Westpac and subsidiary advice firms
Westpac have 94 staff working on their compensation program for people who received non-compliant advice from 44 of their advisers. Westpac have paid $26.5 million to 1173 people. These Westpac subsidiary advice firms are also covered by this compensation program:
- Securitor Financial Group
- Magnitude Group
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.