Millions awaiting remediation as ASIC calls for improved systems

Around $1.6 billion is yet to be paid to consumers in remediation from failures in the financial system.

Data from the Australian Securities and Investments Commission (ASIC) said at least $5.6 billion had been paid over the past six years. This had included two large-scale remediation programmes including around fees for no service or non-compliant advice and mis-selling of junk insurance.

However, there was a further $1.6 billion yet to be paid to an estimated 2.7 million consumers in 36 remediation activities that ASIC was monitoring across superannuation, advice, credit & banking and insurance.

ASIC had issued updated regulatory guidance to help firms pay remediation in a fair and timely manner.

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ASIC deputy chair, Karen Chester, said: “The release of our expanded guidance, along with the updated Making it right field guide, delivers licensees all they need to achieve the right remediation outcomes on their own. It explicitly allows the use of assumptions, to help firms address knowledge gaps and accelerate remediation programs in a way that does not disadvantage consumers.

“Licensees must also do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation. The common stumbling block we have seen across remediations is underinvestment in systems.

“This underinvestment has led to a trifecta of failures. First and foremost, in delivering on promises to consumers, second in identifying the failures and third in being able to remediate consumer loss in a timely way