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ABA acknowledges ASIC report

27 October 2016

Sydney, 27 October 2016: The Australian Bankers’ Association has acknowledged today’s report by the Australian Securities and Investments Commission into refunds for customers who were charged for annual financial advice reviews they did not receive.

Diane Tate, the ABA’s Executive Director – Retail Policy, said the issue related to problems with legacy manual systems and processes, and that banks had taken important steps to fix those problems. 

“It is disappointing that the administrative errors responsible for this problem were allowed to occur. The banks involved acknowledge that their compliance systems and record keeping were inadequate,” she said.

“It is important to recognise that the banks had first identified the problem, proactively reported it to ASIC and are well on the way to resolving it.

“As ASIC acknowledges in its report, most of the issues occurred before the introduction of the Future of Financial Advice reforms, and the systems and process changes banks have since made substantially reduces the likelihood this type of issue will reoccur,” Ms Tate said.

The FOFA reforms introduced in 2013 required customers to opt in to receive ongoing advice and for financial service providers to issue fee disclosure statements. As soon as the banks picked up the problem and self-reported it to ASIC, they began the process of identifying affected customers and repaying them. 

Ms Tate said the banking industry had been working with ASIC on improving record keeping practices, and welcomed the additional guidance on record keeping also released by ASIC today. 

“Banks are implementing changes to their businesses to improve their systems and address community concerns around conduct and culture,” she said. 

Ms Tate said the banking industry had a track record of identifying and self-reporting errors, as well as repaying affected customers.

In this case refunds include the fee that was charged if no service was provided, as well as interest that would have accrued had the fee not been charged.

Consistent with the new ASIC guidelines on remediation programs released on 15 September 2016, the banks are repaying customers in every instance where records of annual financial advice reviews cannot be found. 

Customers have a right of appeal if they aren’t happy with the refund offered by their bank.


Contact: Stephanie Arena 0477 470 677 or Nic Frankham 0435 963 913



Additional background information on actions being taken by banks is below.


Banks have been working with the Federal Government, ASIC and as an industry to implement changes across our businesses to protect consumer interests, increase transparency and accountability and build trust and confidence in banks. These changes include:

Professional standards: Banks strongly support the implementation of new education, ethical and professional standards by the Government. On 17 October, banks announced they are supporting the establishment of the new standards setting body by providing funding to set up the new body to fast-track professionalisation and support the new legislative requirements commencing as soon as possible. 

Reference checking for financial advisers: Banks have introduced new and improved reference checking, building on their existing practices. On 20 September, the industry published a new Protocol so banks can legally share information about the conduct history of advisers before employing them. This is designed to stop advisers with poor conduct and ethical standards moving around the industry. We encourage all AFS licensees to adopt the Protocol. 

Remuneration and transparency about fees: The FOFA reforms banned conflicted remuneration for financial advisers and introduced new obligations for ongoing advice services and fee disclosure. These new obligations are driving improved products, services and better customer outcomes. Technology is also changing banking and financial services so customers have better information, more interactive tools to get the most out of their products and services, and different cost options. The industry is also building on the FOFA reforms by establishing independent reviews on remuneration in retail banking and the Code of Banking Practice. These independent reviews aim to identify further reforms to strengthen commitments to customers. Visit the websites for more information about the ‘Sedgwick Review’ and ‘Khoury Review’.

Remediation programs: Banks have supported the introduction of new regulatory guidance on client remediation, including ensuring the principles apply across all types of financial advice and financial products. On 15 September, ASIC published RG 256 and today published further guidance on record keeping. Banks are making sure their existing compliance systems and practices comply with the guidance and making any necessary adjustments to programs and policies to ensure best practice.

Additional industry standards: Banks have prepared additional industry standards to complement the Government’s new education, ethical and professional standards, so banks don’t just implement the new standards for all financial advisers, but go beyond. Industry standards will cover induction programs, competency and service monitoring, continuous professional development and professional membership. 

Culture: On 21 April, banks announced a comprehensive program for addressing conduct and culture. The banking industry reform package is being independently monitored by governance expert, Mr Ian McPhee AO PSM. Significant progress is being made across the initiatives. The first and second quarterly progress reports can be accessed at betterbanking.net.au.

Strong regulation: Banks support the introduction of an industry funding model for ASIC, examination of the regulator’s powers, and improved breach reporting. 

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