The major banks’ compensation bill for victims of poor advice has increased to $204 million, according to ASIC’s latest update on its ‘fee for no service’ compensation program.
In a statement last week, ASIC announced that AMP, ANZ, CBA, NAB and Westpac have so far repaid more than $60 million out of more than $204 million in expected refunds for failing to provide general or personal financial advice to customers while charging them ongoing advice fees.
In October 2016, ASIC said approximately $23.7 million of fee refunds and compensation had been paid, or agreed to be paid, to over 27,000 customers of ANZ, NAB, CBA, Westpac and AMP that were victims of failed advice delivery.
At the time, ASIC predicted a further $178 million would need to be paid by the banks to over 175,000 customers, equating to a total compensation bill of $201.7 million.
The new figures from ASIC show a slight increase in the total expected compensation bill to $204 million.
According to ASIC’s latest update, the total compensation estimate for ANZ has increased from $49.7 million to $52.4 million.
This is due to the expansion of existing compensation programs at the bank and the identification of further failures by authorised representatives of the ANZ-owned advice businesses, Financial Services Partners Pty Ltd and RI Advice Group Pty Ltd.
On the other hand, AMP's total compensation estimate decreased from $4.6 million to $4.4 million.
There has been no substantial change in CBA's compensation estimate, which remains at approximately $105 million, the majority of which relates to Commonwealth Financial Planning Ltd, ASIC said.
Since October 2016, NAB has reported to ASIC that a further 3,000 customers have been charged incorrect adviser fees.
In addition, the table shows the expected compensation of approximately $34.7 million by NAB's superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), for two breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees.
NAB’s superannuation trustee, NULIS Nominees (Australia) Limited will also compensate customers $34.7 million for failures in relation to the provision of general advice services to superannuation members who paid general advice fees.
According to ASIC’s update, Westpac has so far paid compensation of $2.6 million. The ASIC update said any further compensation amount expected to be paid by Westpac to customers is “not yet available”.
“ASIC will continue to monitor these compensation programs and will provide another public update by the end of 2017,” ASIC said.