The Australian Bankers’ Association has acknowledged today’s report by the Australian Securities and Investments Commission into refunds for customers who were charged for annual financial advice reviews they did not receive.
Diane Tate, the ABA’s Executive Director – Retail Policy, said the issue related to problems with legacy manual systems and processes, and that banks had taken important steps to fix those problems.
“It is disappointing that the administrative errors responsible for this problem were allowed to occur. The banks involved acknowledge that their compliance systems and record keeping were inadequate,” she said.
“It is important to recognise that the banks had first identified the problem, proactively reported it to ASIC and are well on the way to resolving it.
“As ASIC acknowledges in its report, most of the issues occurred before the introduction of the Future of Financial Advice reforms, and the systems and process changes banks have since made substantially reduces the likelihood this type of issue will reoccur,” Ms Tate said.
The FOFA reforms introduced in 2013 required customers to opt in to receive ongoing advice and for financial service providers to issue fee disclosure statements. As soon as the banks picked up the problem and self-reported it to ASIC, they began the process of identifying affected customers and repaying them.
Ms Tate said the banking industry had been working with ASIC on improving record keeping practices, and welcomed the additional guidance on record keeping also released by ASIC today.
“Banks are implementing changes to their businesses to improve their systems and address community concerns around conduct and culture,” she said.
Ms Tate said the banking industry had a track record of identifying and self-reporting errors, as well as repaying affected customers.
In this case refunds include the fee that was charged if no service was provided, as well as interest that would have accrued had the fee not been charged.
Consistent with the new ASIC guidelines on remediation programs released on 15 September 2016, the banks are repaying customers in every instance where records of annual financial advice reviews cannot be found.
Customers have a right of appeal if they aren’t happy with the refund offered by their bank.
