ASIC's fee-for-no-service report card shows the regulator and some financial advice licensees still have fundamentally different views on what constitutes a fee-worthy service.
ASIC's fees-for-no-service further review report card has shone light on areas of fundamental disagreement between the corporate regulator and the advice licensees of the institutions, who stand before a potential advice remediation bill of $1.15 billion.
According to ASIC's report card, CBA and the regulator have vastly differing views on a number of issues, namely the period to be covered by further reviews into the bank's fee-for-no-service issues, how to identify customers who paid fees for no service and whether offering an annual review is sufficient.
The most divergent views of the regulator and CBA are related to what evidence the bank needs to use in proving an annual review was provided to financial advice customers of Count Financial, Financial Wisdom and the Pathways division of Commonwealth Financial Planning.
ASIC said it strongly disagreed with the approach of those licensees, citing how CBA used customer responses to questionnaires as evidence of service delivery in some cases.
Despite coming to an agreement with ASIC in many areas of the report card, Macquarie copped criticism from the regulator over its failure to meet the guidance of ASIC's RG256 over the calculation of refunded fees.
RG256 guides institutions towards paying the Reserve Bank's minimum cash rate plus 6%, however Macquarie proposed using a proxy rate to reflect lost earnings, with either the higher of the Macquarie Cash Management Account rate or the RBA rate to be used.
Similarly, ANZ said it would calculate interest to reflect lost earnings, but would calculate interest at the RBA cash rate plus 4% in instances when it could not do so. The bank's offer was chided by the regulator for also failing to meet the RG256 guidance.
Westpac licensees Securitor and Magnitude and NAB's JBWere also copped heat, with both institutions' report cards littered with instances where the three licensees had not revealed to the regulator how they would identify customers who paid fees for no service, when they would complete the review, or their views as to whether an offer of an annual review is sufficient.
However, in the case of JBWere, ASIC said it is assessing its customer agreements to determine what services customers were entitled to.
In AMP's report card the regulator consistently mentioned the wealth manager had so far not proposed methodologies for advisers who had already left the business.
ASIC commissioner Danielle Press said Australia's financial institutions had taken too long to conduct further reviews into their fees-for-no-service issues, welcoming recent Government commitments to allow the regulator 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 on Monday.
"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."
Macquarie has indicated to the regulator it expects to complete the review by mid-2019, while AMP expects to be complete in the second half of 2021.
ANZ gave no indication of when its reviews would be completed, while CBA indicated additional reviews of Count Financial, Financial Wisdom and the Pathways division of CFPL would continue.
NAB's review of NAB Financial Planning and its associated remediation payments are due for completion by the end of this year, while the review and remediation programs of Apogee Financial Planning, Godfrey Pembroke, GWM Adviser Services and Meritum Financial Group are expected to finish by the end of 2020.
JB Were has not advised ASIC of when it will complete its review, and neither has Westpac's Securitor and Magnitude. Westpac's review - and its review of St. George Bank - and all related remediation is due for completion in the second half of 2019.