Fee For No Service Remediation Could Pass $850 Million

ASIC has indicated it expected remediation related to the charging of fees for no service (FFNS) to pass $850 million.

The regulator put forward the figure in its latest report on the progress of FFNS remediation by AMP, ANZ, CBA, NAB and Westpac, in which it also added three non-aligned advice groups

Bendigo Financial Planning, State Super Financial Services Australia Limited (trading as StatePlus), and Yellow Brick Road (YBR) Wealth Management were added to the list of advice providers required to return funds related to FFNS.

In adding the groups, ASIC also revealed that YBR would return around $100,000 to clients, Bendigo Financial Planning would return $2.5 million and StatePlus would return more than $37 million, making it the third largest sum of money returned to advice clients after that returned by CBA and ANZ (see table below).

ASIC also noted that AMP and the big four banks had repaid a further $6.4 million to clients since its last release of compensation figures (see: Aligned Advice Groups Close Gap on Non-Existent Advice Compensation), at the end of October 2017, adding that five licensees or institutions had made provision for future remediation payments  and “…if all of these provisions are paid in full, FFNS remediation may exceed $850 million”.

These extra provisions include:

  • $240 million by AMP which covers all advice licensees within the AMP group and remediation for the period up to 31 December 2017 (see: AMP Accelerates Advice Remediation Program)
  • $65 million by NAB across its financial advice licensees relating to FFNS remediation and project costs
  • $24 million by Westpac relating to FFNS remediation for the 2017-18 financial year for Westpac Banking Corporation
  • $53 million by Stateplus relating to FFNS remediation and to cover further FFNS customer remediation and remediation project expenses.

ANZ has advised ASIC that it has provisioned for FFNS remediation, but has not yet provided details of that provision to ASIC.

Compensation Payments as Reported to ASIC as at 30 June 2018

Group Compensation Paid or Offered Estimated Future Compensation Total Estimate of Compensation
AMP $5,010,637 Not yet available $5,380,637
ANZ $50,793,257 $8,443,300 $59,236,557
CBA $118,040,178 $25,274,717 $143,314,895
NAB $5,690,797 $1,019,623 $6,710,420
Westpac $6,896,237 Not yet available $6,896,237
Bendigo $0 $2,500,000 $2,500,000
StatePlus $37,223,999 Not yet available $37,223,999
Yellow Brick Road $0 $101,477 $101,477
Total $223,655,105 $37,709,117 $261,364,222

 

  • Ken

    If CBA actually retrieved files from archive to show that they had actually provided a services rather than just say it would be cheaper to pay compensation it would not look so bad. Their laziness makes things look much worse than they actually are, which makes our industry look worse than it actually is.