SYDNEY • Australia's corporate watchdog yesterday rebuked the biggest banks and financial services firms for delays in fixing internal systems that resulted in customers paying fees for services they had not received.
The Australian Securities and Investments Commission (Asic) said it had been supervising the four biggest banks - Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group and National Australia Bank - plus investment bank Macquarie Group and wealth manager AMP, as they reviewed the systems that led to such fees.
But the regulator said the firms had taken too long to identify systemic failures. "These reviews have been unreasonably delayed," said Asic commissioner Danielle Press.
The reviews were large, covering up to 10 years of operations, six institutions and more than 7,000 advisers, but Ms Press said "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".
Asic said the four retail banks and AMP had paid or offered a total compensation of about A$350 million (S$335 million) for wrongfully charged fees by January this year, and allowed for further payments of another A$800 million. The regulator, however, added that those amounts were incomplete.
The causes of the delays included the companies taking a "legalistic approach" and failure to adopt effective ways to identify and compensate wronged customers, Asic said.
The regulator said it is also planning enforcement action against an unspecified number of entities for taking customer fees for services not rendered.
A royal commission inquiry into misconduct in the financial services sector has put banks and investment firms under pressure to clean up processes that led to customers being automatically billed for wealth management advice they did not receive.
The four retail banks and AMP had paid or offered a total compensation of about A$350 million (S$335 million) for wrongfully charged fees by January this year, and allowed for further payments of another A$800 million, ASIC said, but added that those amounts were incomplete.
It had recommended referring 24 cases to the regulators for possible prosecution, without giving details, though analysts expect most of those cases relate to charging fees for no service.
The commission had questioned the retail banks and AMP over charging such fees.
AMP's chairman, chief executive and some of its board members left the company following allegations that they interfered with a supposedly independent report to Asic on the topic.
Macquarie, which was not accused at the inquiry of current instances of charging fees for no service, declined to comment.
An AMP spokesman said remediation is a key priority for the company this year, and added that it had allotted resources to ensure customers were remediated fairly.
A Commonwealth Bank of Australia spokesman said the bank would prioritise completing all remaining work.
A National Australia Bank spokesman said: "The board has expressed that these matters should have been handled better. Under new interim CEO Philip Chronican's leadership, the bank has a renewed sense of urgency about the issues it confronts and is focused on customer outcomes."
Representatives of Australia and New Zealand Banking Group and Westpac did not return requests for comment.