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Fee for no service, dodgy advice refunds hit $1.86bn

The 2018 Royal Commission led by Commissioner Ken Hayne into misconduct in the Banking, Superannuation and Financial Services Industry heard damning evidence of financial institutions charging fees for no service. Picture: David Geraghty

The big four banks as well as AMP and Macquarie have coughed up $1.86bn in refunds to customers who were given shoddy advice and charged fees where no service was given, with $620.9m added to the compensation paid out over the six months to June 30.

Of the six institutions, NAB tops the charts with the highest total refunds to date, paying out more than $556m to customers caught up in the fees-for-no-service scandal and a further $80m to customers who received dodgy advice.

Westpac is a close second, with its refunds to date across both fees for no service and non-compliant advice topping $630m, while wealth manager AMP takes third place with $270m of compensation paid out so far.

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While total payouts by NAB and Westpac are very close – at $636m and $630m — the number of customers receiving refunds from each bank is markedly different: Westpac has issued refunds to just under 75,000 customers, while NAB has paid compensation to around 680,000 customers.

This means the average payout per Westpac customer sits at $8400, while the average NAB payout is a little over $930.

Of the others, CBA has refunded $178.7m to its customers, ANZ has handed over $141.7m and Macquarie has dished out $4.6m.

All up, more than $1.6bn has now been refunded or offered to more than 1 million customers caught up in the fees-for-no-service scandal, with a further $224.6m handed over to customers who received dodgy advice.

The fees-for-no-service scandal erupted at the 2018 Hayne banking royal commission and plunged AMP into crisis, claiming the scalps of then-chair Catherine Brenner and then-CEO Craig Meller. NAB chairman Ken Henry and CEO Andrew Thorburn were also among those who resigned in the wake of the shocking allegations.

The updated figures from ASIC come after the corporate regulator previously slammed the institutions for dragging their feet on paying out compensation to affected customers.

ASIC last month launched fresh legal action against AMP for charging customers fees without providing any service.

The civil action, launched in Federal Court in late July, came shortly after the Commonwealth Director of Public Prosecutions declined to lodge criminal charges against AMP over its alleged fees-for-no-service misconduct in relation to its buyer-of-last-resort policy.

In the latest legal action, ASIC alleges six AMP companies charged advice fees to more than 1500 customers despite being notified that those customers were no longer able to access the relevant advice. ASIC also alleges AMP received over $600,000 in advice fees from affected customer accounts.

AMP is also being sued by the regulator for allegedly charging fees to 2000 customers despite being notified of their deaths.

cliona odowd

Melbourne

Cliona O’Dowd joined The Australian in 2016 and writes on financial services. She was previously the editor of business news and commentary website Business Spectator. Before moving into journalism she spent a … Read more

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