The Australian Securities and Investments Commission (ASIC), in an update on its Wealth Management Project, said it was focusing on the largest financial advice firms and looking mainly at fees which have been charged as part of a client’s service agreement with their financial adviser, including annual advice reviews.
ASIC’s statement came as the ANZ Bank, Australia’s No. 3 lender by market value, revealed on Thursday it will pay about $23.3m (£15.5m) in compensation to clients of a fee-for-service package after it failed to provide a documented annual review. The decision will affect about 8,500 clients.
Australian regulators are cracking down on financial planning and advice divisions of banks after a scandal at the Commonwealth Bank of Australia involving wrong or misleading financial advice.
In October last year ASIC set up a specialist Wealth Management Project to focus on the large advice entities – the four major Australian domestic banks, Macquarie Bank and AMP. The project was launched in response to a scandal at the Commonwealth Bank of Australia involving wrong or misleading financial advice.
ASIC deputy chairman, Peter Kell said where evidence is found of breaches of the law relating to fees being charged where no advice service has been provided, “’ASIC will consider all regulatory options, including enforcement action.
“We will look to ensure that advice licensees follow a proper process of customer remediation and reimbursement of fees where such breaches have occurred,” he said.
In recent years, ASIC has taken a lot of enforcement action against both financial advice firms and individual advisers.
In the last five years, it has removed 69 advisers from the industry temporarily or permanently; secured 19 criminal outcomes; had 23 licences cancelled, and entered into over 25 enforceable undertakings.
It also currently has a range of enforcement actions ongoing, including: four matters before the court, and 17 criminal matters being investigated.