Fee for no service remediation could exceed $1 billion
The Australian Banker’s Association (ABA) has confirmed it has approached the Australian Securities and Investments Commission (ASIC) seeking to change the Banking Code of practice on the basis of the critical interim findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Service Industry.
At the same time, the ABA has forecast that the total cost of remediating fee for no service could exceed $1 billion.
The ABA has this week sought to get on the front foot in addressing issues raised by the Royal Commission and just a day after the Commonwealth Bank declared it would be rebating grandfathered commissions, announced that the banks would also be ending fees for no service and grandfathered commissions.
ABA chief executive, Anna Bligh said the banks had already begun the process of refunding and compensating customers and said the Banking Code would need to change.
She said that the ABA had written to ASIC seeking approval for such a change but, in the meantime, the banks could start the process and were already compensating customers who were affected.
“There is more work to be done in that compensation area, but banks will not be waiting until next year, and they won’t be waiting on the Royal Commission report on the consumer fees for no service. It is over, and banks have started the process of refunding customers,” Bligh said.
“ASIC has been looking at the issue of fees for no service for some time. What is clear is the Royal Commission has put beyond doubt that this practice is widespread, much more widespread than people understood, and affects thousands more customers than originally appreciated,” she said.
“What we now know is that banks are in the process of refunding customers who’ve paid these fees when they shouldn’t have, when they didn’t need to, and where services weren’t provided. We know that the amount that customers will see refunded to them is likely to escalate beyond a billion dollars.”
Recommended for you
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
Australia has marked a decade among the best countries for retirement, according to Natixis, but with high inflation threatening their retirement goals, a third say they would get professional advice to improve their chances.
When it comes to the risks of acting as a responsible manager at an AFSL, compliance firm Holley Nethercote has shared a range of red flags that could see them facing disciplinary action from the corporate regulator.
Wealth management platform provider Netwealth has announced a partnership with FinClear to streamline trading capabilities for advisers.
