Aligned advice groups will collectively pay up to 15% more compensation to clients who were charged for advice they did not receive, with the total expected level of compensation to reach $205 million dollars.
AMP, ANZ, CBA, NAB and Westpac had paid $60 million, or 29.6%, of this latter sum by 21 April, according to ASIC which stated that compensation levels had continued to rise from that date.
ASIC released the figures as part of an update on compensation outcomes stemming from institutionally aligned advice groups failing to provide financial advice to customers while charging ongoing advice fees.
The regulator stated the increase in total compensation was in comparison to figures released in Report 499: Financial advice: fees for no service from October 2016 which indicated total collective compensation was $178 million at that time (see: Aligned Advice Groups to Pay Millions in ‘Fee For No Service’ Refunds).
At the time of publication of the report $23.7 million had been paid to more than 27,000 customers and since that date a further $37 million has been paid or offered to more than 18,000 customers.
“…$1.2 million in compensation stems from a systemic fees-for-no-service issue carried out by a single adviser…”
Of the five institutions covered by the report and compensation schemes ASIC said AMP and CBA had not increased their levels of compensation since the October report. CBA’s compensation estimate remained at approximately $105 million and AMP’s total compensation decreased from $4.6 million to $4.4 million following a review of customer files.
The total compensation estimate for ANZ increased from $49.7 million to $52.4 million as further failures were identified within ANZ and the ANZ-owned advice businesses Financial Services Partners and RI Advice Group.
While Westpac’s estimated compensation figure is low at $2.67 million, $1.2 million in compensation stems from a systemic fees-for-no-service issue carried out by a single adviser with another $1.4 million paid to 161 customers of 14 other advisers relating to fee-for-no-service failures over the period of 1 July 2008 to 31 December 2015.
The estimated compensation from NAB related to personal advice fees increased by $386,000 across 3624 customers since the release of Report 499.
NAB will also be expected to pay nearly $35 million in compensation through its superannuation trustee, NULIS Nominees breaches involving failures in relation to the provision of general advice services to superannuation members who paid general advice fees (see: NAB Super Trustee Hit Over Insurance Advice Fees).
