Australia's major financial services institutions are taking too long to remediate customers over their fee-for-no-service issues and ASIC is not pleased.
The corporate regulator released an update to the "further review" programs currently underway at six of Australia's largest financial institutions - AMP, ANZ, Commonwealth Bank, Macquarie, NAB and Westpac.
According to ASIC commissioner Danielle Press, the institutions have taken too long to conduct further reviews of their fee-for-no-service issues. Press said ASIC welcomed recent Government commitments to hand the corporate regulator new powers to speed up future remediation programs.
"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," Press said.
"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."
ASIC said the delays boiled down to a variety of issues, but cited poor record keeping and the "legalistic" approach to the determination of what advice services institutions were required to provide.
An example, ASIC said, was that some institutions had disputed ASIC's determination that merely offering advice customers an annual review is not enough to satisfy the requirement of an annual review stated in some service agreements.
The regulator said delays were also due to a failure by some institutions to propose "reasonable customer-centric" methodologies to identify and compensate customers. ASIC noted this was despite the fact it had clearly articulated its expectations.
ASIC said it had rejected some methodologies which required customers to opt-in to a review and remediation program. It also rejected a proposal to assess if there had been "a fair exchange of value" with customers instead of assessing whether customers received the specific services they paid for.
ASIC's statement comes as consultancy firm KPMG ramps up its efforts to help clients deal with financial advice remediation, with the firm recently expanding its advice remediation team. Additionally, KPMG last week announced it would bring an AI-driven remediation regtech to Australia.