ASIC: Reviews into fees-for-no-service are "unreasonably delayed"

The Australian Securities and Investments Commission (ASIC) has slammed Australia’s major banking and financial services institutions for the “unreasonable delay” in their fees-for-no-service (FFNS) review programs.

ASIC is currently involved in a large-scale FFNS supervisory work, which includes overseeing the institutions' compensation programs for those impacted by the reported failures, and the institutions’ reviews to determine whether there were further systemic FFNS failures beyond those already identified and reported to ASIC since 2013.

The corporate regulator said AMP, ANZ, CBA, Macquarie, NAB, and Westpac had taken too long to conduct the reviews, and that most of them are yet to complete further reviews.

“These reviews have been unreasonably delayed,” said Danielle Press, ASIC commissioner. “ASIC acknowledges that they are large-scale reviews – they relate to systemic failures over long periods with reviews going back six to 10 years and cover 36 licensees from the six institutions that currently authorise more than 7,000 advisers. However, we believe 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.”

The main reasons for the delays include the institutions’ poor record-keeping and systems, failure to propose reasonable customer-centric methodologies to identify and compensate customers, and the legalistic approach used by some institutions to determine the services they were required to provide.

ASIC also reported that Clayton Utz has surrendered the documents related to AMP’s FFNS scandal.

The action was made following federal court proceedings commenced in Dec. 2018, compelling the firm to hand over the internal file notes of its interviews with current and former employees of AMP – interview notes AMP earlier claimed were subject to legal professional privilege (LPP).

“Entities should take seriously their obligations under statutory notices issued by ASIC, including producing documents in accordance with the specified timeframe and not preventing the disclosure of documents to ASIC by making inappropriate LPP claims,” said Daniel Crennan QC, ASIC deputy

chair. “These interruptions delay and frustrate ASIC’s proper investigation. ASIC is pleased that the documents have now been produced but is disappointed that the matter was not resolved sooner."