ASIC has released an update on the review programs undertaken by six of Australia’s major institutions regarding fee-for-no-service. The report card provided by ASIC shows a mottled picture, with wide variations in the approaches being taken by institutions, and the timelines within which they expect to complete the project.
Supervision programs were undertaken by AMP, ANZ, Commonwealth Bank, Macquarie, National Australia Bank and Westpac.
Outcomes of the update
Most institutions have not yet completed further reviews to identify systemic failures beyond those that have already been identified and reported to ASIC
ASIC says that the institutions have taken too long to conduct these reviews
ASIC has new powers to potentially speed the process up in future
ASIC’s report said, 'These reviews have been unreasonably delayed. ASIC acknowledges that they are large scale reviews – they relate to systemic failures over long periods with reviews going back six to 10 years and cover 36 licensees from the six institutions that currently authorise more than 7,000 advisers . However, we believe the institutions have failed to sufficiently prioritise and resource their reviews, particularly as ASIC advised them to commence the reviews in mid-2015 or early 2016.
'We are pleased the Government has agreed to adopt recommendations from the 2017 ASIC Enforcement Review Taskforce Report, which includes a directions power. This would allow ASIC to direct AFS licensees to establish suitable customer review and compensation programs.’
Delay reasons include:
Poor record-keeping and systems, customer files unavailable
Failure by some institutions to propose reasonable customer-centric systems to identify and compensate customers - some methodologies were rejected due to ‘opt-in’ for reviews and mediation, and whether the customer thought there had been a ‘fair exchange of value’ instead of did the customer get what they paid for
Some institutions took a legalistic approach of services they were required to provide
For a full overview of each institution’s approach, see the full media release by ASIC.