Billion-dollar bank compo bonanza

Which banks are paying compensation
to investors?

Banks and financial institutions will
pay about one billion dollars in total compensation to investors and customers
for various breaches of the laws and standards stretching back more than 10
years.

Commonwealth Bank, ANZ, NAB, Westpac
and AMP have paid out almost $120 million in total compensation payments to
investors who received ‘non-compliant’ financial advice.

More than $350 million has already been paid out by AMP, ANZ,
CBA, NAB, Westpac, Yellow Brick Road, Bendigo Bank, Police Bank and three other
smaller financial institutions to customers who were charged financial advice
fees for no service with a total of $800 million budgeted for this remediation
program.

NAB’s super trustee has already paid out $35 million to
220,000 investors who were charged fees incorrectly and $1.8 million to 10
customers who had insurance claims wrongly assessed.

Only Commonwealth Bank, which has been stung previously by
regulators and has been paying compensation to investors over various matters
for the last few years, is nearing the end of its remediation program.

In 2014 ASIC found that Commonwealth Bank’s $52 million
compensation program for investors who received bad advice had “inconsistency
and deficiencies.”

ASIC ordered a new investigation and Commonwealth Bank agreed
to offer up to $5,000 to more than 4,000 investors to pay for a financial
advice review.  

More compensation will be coming as the banks continue to
comb through their records and identify victims of non-compliant advice said
the Australian Securities and Investments Commission in a statement issued
today.

Why are banks paying compensation for bad advice?

The ‘non-compliant advice’ compensation program arose out of
an ASIC investigation that reported in 2017 and covered a period stretching
back to 2009.

Since 2012 various new laws have addressed concerns about
standards in the financial advice industry including the Future of Financial
Advice (FOFA) laws in 2012. The FOFA law introduced a requirement for advisers
to act in the best interests of their clients
(subject to qualifications), enhanced the powers of regulators and created
annual fee disclosure and bi-annual opt-in advice agreements, among other
reforms.

Financial advisers must now be listed on ASIC’s Financial Adviser register.

Despite these steps forward, ASIC has issued a statement
saying past misdeeds will not be swept under the rug.

“More reforms are being introduced, including improvements to
professional standards for advisers.

“These reforms will help to improve customer outcomes in the
future,” said the ASIC statement.

“However, we also consider it important that past misconduct
is effectively addressed.”

Right now, the big five banks have assigned hundreds of
employees to identify and repay investors who were charged for bad advice.

AMP and subsidiary advice companies

AMP has paid almost $25 million to 1903 investors who
received bad advice from 32 AMP advisers, according to a statement released by
the Australian Securities and Investments Commission. AMP has assigned 143
staff to identify victims and repay them.

The AMP remediation program for non-compliant advice covers
customers of the following AMP owned financial advice firms:

• AMP Direct
• AMP Financial Planning
• Charter Financial Planning
• Forsythes Financial Services
• Genesys Wealth Advisers
• Hillross Financial Services
• IPAC Securities
• King Financial Services
• PPS Lifestyle Solutions
• Prosperitus
• Quadrant Securities
• SMSF Advice
• Strategic Planning Partners
• TFS Financial Planning
• Total Super Solutions
• Tynan Mackenzie

Commonwealth Bank and subsidiary financial advice firms

Commonwealth Bank has just two staff working on their
remediation program now. Commonwealth Bank have paid $9.3 million to 853
customers who received bad advice from 21 advisers. Commonwealth Bank expect to
complete all compensation payments by the end of August 2019.

The Commonwealth Bank remediation program for non-compliant
advice covers customers of the following CBA owned financial advice firms:

• Commonwealth Financial Planning
• Financial Wisdom
• BW Financial Advice
• Count Financial
• Commonwealth Private
• Commonwealth Securities

ANZ Bank and subsidiary financial advice firms

ANZ have 89 staff working to repay customers of non-compliant
advice. ANZ have paid 1357 people a total of . “ivermectin” “pills”cats 7 million.

ANZ’s program also covers the following subsidiary financial
advice firms:

• Financial Services Partners
• Millennium 3 Financial Services
• RI Advice Group

NAB and subsidiary financial advice firms

National Australia Bank have paid $32.4 million to 1032
customers who got bad advice from 81 NAB advisers. National Australia Bank have
also paid an additional $14 million in compensation for non-compliant advice
provided by just one adviser, reported ASIC. NAB have 573 staff working on this
project.

NAB’s compensation program covers the following subsidiary
firms:

• GWM Adviser Services
• Apogee Financial Planning
• Godfrey Pembroke
• Meritum Financial Group
• JB Were Limited

Westpac and subsidiary advice firms

Westpac have 94 staff working on their compensation program
for people who received non-compliant advice from 44 of their advisers. Westpac
have paid $26.5 million to 1173 people. These Westpac subsidiary advice firms
are also covered by this compensation program:

• Securitor Financial Group
• Magnitude Group

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general in nature and does not take into account your personal situation. You
should consider whether the information is appropriate to your needs, and where
appropriate, seek professional advice from a financial adviser. If you or
someone you know is in financial stress, contact the National Debt Helpline on
1800 007 007.