Australia’s corporate watchdog rebuked the biggest banks and financial services firms on Mar. 11 for delays in fixing internal systems that resulted in customers paying fees for services they had not received.
The Australian Securities and Investments Commission (ASIC) said it had been supervising the four biggest banks—Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group Ltd and National Australia Bank Ltd—plus investment bank Macquarie Group Ltd and wealth manager AMP Ltd, as they reviewed the systems that led to such fees.
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But the regulator said the companies had taken too long to identify systemic failures.
“These reviews have been unreasonably delayed,” said ASIC commissioner Danielle Press.
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The reviews were large, covering up to 10 years of operations, six institutions and more than 7,000 advisers, but Press added, “The institutions have failed to sufficiently prioritize and resource their reviews, particularly as ASIC advised them to commence the reviews in mid-2015 or early 2016.”
The four retail banks and AMP had paid or offered a total compensation of about $350 million (US$246 million) for wrongfully charged fees by January 2019, and allowed for further payments of another $800 million (US$563 million), ASIC said, but added those amounts were incomplete.
The causes of the delays included the companies taking a “legalistic approach,” poor recording keeping, and failure to adopt effective ways to identify and compensate wronged customers, ASIC added.
The regulator said it also planned enforcement action against an unspecified number of entities for taking customer fees for services not rendered.
A Royal Commission inquiry into misconduct in the financial services sector has put banks and investment firms under pressure to clean up processes that led to customers being automatically billed for wealth management advice they did not receive.
It had recommended referring 24 cases to regulators for possible prosecution, without giving details, though analysts expect most of those cases relate to charging fees for no service.
The commission had questioned the retail banks and AMP over charging such fees.
AMP’s chairwoman, chief executive and some of its board left the company following allegations they interfered with a supposedly independent report to ASIC on the topic.
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Macquarie, which was not accused at the inquiry of current instances of charging fees for no service, declined to comment.
Remediation is a key priority for AMP this year, a spokeswoman said adding that it had allocated additional resources to ensure customers were remediated fairly and quickly.
A CBA spokesman said the bank would prioritize completing all remaining work, while representatives of the smaller three retail banks did not return requests for comment.