Sorry, Here's $1bn

Thousands of customers can expect compensation in the fees-for-noservice scandal

- Susan Hely

Do you qualify for some of the $1 billion that will be paid out to clients of at least nine financial institutions? It is quite a windfall. The nine have been caught out charging for advice or services that they never provided and $1 billion is the amount being returned to customers.

The amount of compensation to superannuation fund members and investors has been climbing – at times leaping – in the past couple of months. It is a monumental stuff-up by the financial groups that has been hidden from public view until recently.

But it is now out in the open, thanks to the pressure from the royal commission into financial misconduct, although the regulator ASIC has been investigating planning groups and wealth businesses for charging fees and failing to provide ongoing advice since 2015.

ASIC realised it was onto something in 2016 when it estimated that there were 176,000 customers to be paid total fees of $154 million. It now says that the figure is at least $1 billion – and chances are it could be quite a bit more as there are many financial institutions scrambling to finalise figures.

The nine groups that ASIC has identified so far are AMP, ANZ, CBA, NAB, Westpac, Bendigo Financial Planning, StatePlus, Yellow Brick Road Wealth Management and NAB’s NULIS Nominees.

An indication of the extent of the issue is given in the 3500 documents that NAB provided the week before it was to appear before the royal commission. NAB’s overcharging (and cover-up) goes back 14 years to 2004.

The fees-for-no-service scandal has been largely centred on the retail super sector, with the exception of the financial planning division for public servants in NSW, now called StatePlus. ASIC has also named Police Financial Services, which trades as BankVic.

Retail fund fees have always been higher than those of industry funds, which do not use financial advisers as gatekeepers or pay commissions.