The Australian Securities and Investments Commission (ASIC) is criticizing top Australian banks for what the regulator said is an inefficient process of reviewing internal systems that allowed the banks to charge excess fees to customers.
Reports in Reuters on Monday (March 11) said the ASIC is continuing to supervise the nation’s four largest banks — Commonwealth Bank of Australia, Westpac, ANZ and National Australia Bank — as well as investment bank Macquarie Group and wealth manager AMP, as the financial institutions conduct their own internal reviews of fees charged to customers for services those clients never actually used.
But the regulator says those efforts have taken too long, with ASIC commissioner Danielle Press saying, “These reviews have been unreasonably delayed.”
“The institutions have failed to sufficiently prioritize and resource their reviews, particularly as ASIC advised them to commence the reviews in mid-2015 or early 2016,” she said.
According to reports, the banks are reviewing operations as far back as 10 years ago, with more than 7,000 advisors involved. So far, the banks have compensated affected customers a combined $246 million (A$350 million), but the ASIC said further compensation payouts have been delayed thanks to what Press described as their “legalistic approach” to the reviews, as well as insufficient record keeping and the failure to identify and adopt more efficient review processes.
The reviews are the result of a Royal Commission investigation into allegations of mistreatment of customers and other misconduct in Australia’s banking sector, a probe that found evidence of small business mistreatment and banks’ billing customers for advisory services that were never rendered. The Royal Commission has referred two dozen cases for regulators, which could result in prosecution. Reports said analysts believe most of those cases relate to those advisory fees.
Regulators are also adopting a range of reforms for the banking industry aimed at improving services, though policymakers are unclear on how the effort will impact small businesses, with debate over how to define a “small business” and whether to include SMBs under borrower protection rules.