Australian regulator chides banks delays repaying wrongly charged fees

SYDNEY (Reuters) – Australia’s corporate watchdog rebuked the country’s biggest banks and financial services firms on Monday for delays 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 which led to wrongful fee charging.

But the regulator said those companies had taken too long to identify systemic failures.

“These reviews have been unreasonably delayed,” said ASIC commissioner Danielle Press.

The reviews were large, involving up to 10 years of operations, six institutions and more than 7,000 advisers, but “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”, Press added.

The four retail banks and AMP had paid or offered a total of about A$350 million ($246 million) in compensation for wrongfully charged fees by January 2019, and allowed for further payments totally another A$800 million, ASIC said, but noted that those amounts were incomplete.

The causes of the delays included the companies taking a “legalistic approach”, their poor recording keeping, and their failure to set up effective methods to identify and compensate wronged customers, ASIC added.

The regulator said it was also planning enforcement action against an unspecified number of entities for taking customer fees for services not rendered.

A Royal Commission inquiry in misconduct in the financial services sector during the past year, has put banks and investment companies under pressure to clean up processes that had resulted in customers being automatically billed for wealth management advice that they had not received.

It had recommended that 24 cases be referred to regulators for possible prosecution, without giving details, though analysts expected most of those case would relate to charging fees for no service.

The commission had questioned the retail banks and AMP over charging fees for services not provided.

AMP’s chairwoman, CEO and some of its board left the company following allegations they interfered with a supposedly independent report to ASIC on the topic.

Macquarie, which was not accused at the inquiry of any current instances of charging fees for no service, declined to comment. Representatives of the four retail banks and AMP were not immediately available for comment.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.