fbpx
Skip to main content
Get step-by-step help: Financial Assistance Hub

Ending fees for no service, grandfathered payments

10 October 2018

Australia’s banks will change the Banking Code of Practice to overhaul the way they manage a customer’s estate when they have died and end ‘fees for no service’ across the industry. Further to this they will seek new legislation to end grandfathered payments and trail commissions for financial advisers.

These reforms are the first of several key changes in response to the Royal Commission and include:

  • Ending ‘fees for no service’ – Banks will change the way they manage ongoing financial advice, proactively contacting customers to confirm what advice is required and only charging for what is provided.
  • Changing the Banking Code of Practice to improve the way banks manage a deceased estate – Once notified of a customer’s death, banks will proactively identify fees that are for products and services that can no longer be provided in the circumstances, stop charging those fees and refund any paid.
  • Seeking new legislative changes to the Future of Financial Advice (FOFA) reforms to remove all legislative provisions that allow grandfathered payments and trail commissions in financial advice.

CEO of the Australian Banking Association Anna Bligh said these initiatives addressed two of the strongest concerns raised by the Royal Commission’s Interim Report.

“It has always been unacceptable for any organisations to charge fees without providing a service,” Ms Bligh said.

“This announcement will put beyond the shadow of a doubt that this practice has no place in Australia’s banking industry.

“Banks will change the way they manage a customer’s account, proactively contacting them to confirm what services are required for their investments and only charging for those provided.

“This issue of charging fees without service, particularly when customers have recently died, was raised during the Royal Commission and identified as unacceptable.

“When someone loses a loved one, they need support and compassion as they finalise their loved one’s financial affairs. Charging ongoing advice fees to dead people is clearly unacceptable,” she said.

Right now banks are working with customers to refund those charged a fee where no service was provided. Latest ASIC data indicates customers will receive more than $1 billion in refunds.

“In addition to these changes the industry is supporting legislation to remove grandfathering provisions in relation to financial advice,” Ms Bligh said.

“This is another important piece in the puzzle of ensuring there are no conflicts for advisers,” she said.

ENDS
Contact: Rory Grant 0475 741 007

More information is available on the ABA’s Royal Commission page.

Latest news

1 / 3
Media Releases
Australian banks join new Fraud Reporting Exchange digital platform to help halt payments to scammers 
16 May 2023

Australian banks today launched a new digital platform that will facilitate the quick reporting of fraudulent payments en route or transferred to another bank.

Read more
Transcript
Anna Bligh interview with ABC Breakfast TV on Fraud Reporting Exchange announcement
16 May 2023

“Speed is the essence when it comes to getting your money back from a scammer. Even if you’re not sure, even if you just suspect something’s not right, ring your bank as fast as you possibly can.”

Read more
Media Releases
Almost 40% leave wallets at home as mobile phone and smartwatch payments soar  
12 May 2023

The nation’s shift to digital banking is gathering pace, with the number of people leaving home without their wallet or cards, relying on their phone or another device instead, doubling in three years. The rapid changes are captured in a new ABA interactive Spend the Day site.

Read more