South Australians using new consumer remediation service to win refunds for dodgy fees

Brian Gillan is among a growing number of Australians who have won hefty refunds after being stung by dodgy fees. This is how he did it.

Australians hit by dodgy insurance and financial advice fees are receiving thousands of dollars in refunds using a new service, but a major consumer advocacy group has warned it comes with risks.

Remediator claims to be the latest service of its kind set up in the wake of the Banking Royal Commission, with some ripped-off consumers clawing back almost $12,000 with its help.

The Commission exposed the pressure tactics banks and insurers used to sell billions of dollars worth of junk consumer credit insurance, and also revealed that some financial advisers charges fees for services that were never provided.

But the Consumer Action Law Centre has warned consumer remediations services aren’t regulated, with customers left with few avenues of complaint if something goes wrong.

Australians hit by dodgy insurance and financial advice fees are receiving thousands of dollars in refunds using a new service, Remediator. Picture: iStock

Remediator insists payment is made on average 38 days from the point Remediator is contacted.

But its assistance isn’t free: a service fee of 20 per cent plus GST is charged on the refunded amount, but this is only payable if one is secured.

For example, if a consumer won back $10,000, it would cost them $2200.

“The Banking Royal Commission exposed dirty tricks used to dupe consumers over many years. Now thanks to its findings, they can take some power and money back,” Remediator spokesman David Liston said.

“Unfortunately, consumers don’t even know if they’re eligible or where to start the process of

investigating if they are. Remediator helps to solve that problem so it’s an exciting development.”

Remediator asserts it can help consumers who have paid consumer credit insurance, lenders mortgage insurance, car add-on insurance (including, among others, GAP insurance, extended warranties, and purchase price protection cover), and ongoing financial adviser fees assess if they have been inappropriately charged and make a claim.

It says it manages the entire refund process from claim to settlement on the customer’s behalf.

Remediator claims it has helped hundreds of consumers across the country claw back money. Based on figures it provided, South Australians have on average the largest payouts at $3203, followed by NSW ($1970), Queensland ($1584) and Victoria ($1223).

South Australian retiree Brian Gillan was refunded almost $11,700 after paying fees for financial advice that he never received. Picture: Dean Martin

Retiree Brian Gillan was refunded almost $11,700 after paying fees for financial advice that he never received.

Mr Gillan had a financial Adviser manage an investment portfolio for him in the lead up to his golden years. Once he reached retirement, the Semaphore local decided to move his investments to an industry superannuation fund because it offered better returns.

He was shocked to find how much he had paid in administration, management, and adviser fees when he got his final statement before the transfer.

“For example, I would meet with my financial Adviser, but there were a whole series of charges over the course of a year,” Mr Gillan said.

“I had no idea that I was being charged this much for these services. Firstly, I wasn’t aware of them and secondly, I didn’t receive most of what they were saying they had provided.”

Mr Gillan said he closed his managed investment portfolio about a decade ago, and had requested a fee refund directly from the company several years ago but was told he didn’t have a case.

He engaged Remediator late last year and provided them with as much documentation relating to his old account in order to build a case.

“They never promised me anything. They just said we’ll investigate the case and see what we can do. So I was happily surprised at the end when I got some money back.”

He said the entire process took about three months.

CEO of the Consumer Action Law Centre, Gerard Brody. Picture: Stuart McEvoy

Consumer Action Law Centre CEO, Gerard Brody, said Australia lacked a comprehensive consumer protection framework for claim management firms, such as consumer remediation services.

“Recent reforms mean that companies that deal with debt negotiation and insurance claims handling will have oversight by ASIC from later this year. However, where a firm seeks to obtain a refund of fees paid – they are not specifically regulated,” Mr Brody said.

Mr Brody said this meant that if something went wrong during the claim process, customers may be less protected and would not be able to take their complaint to an external dispute resolution body like the Australian Financial Complaints Authority (AFCA).

He said the Centre’s “Demand a Refund” tool, which is free to use, had helped consumers win back more than $30 million since it was established in 2016.

While the tool only helps consumers develop a tailored complaint letter to sent to insurers or financiers and does not manage the whole remediation process, Mr Brody said it was “often sufficient in getting a refund paid”.

“Where a refund isn’t paid, a person is then prompted to make a complaint to AFCA, which again is free,” he said.

He said the some finance firms had established their own remediation schemes.

“For these schemes, the firms will generally be in touch with its customers and either provide refunds automatically or provide information about how the refund can be obtained,

“There are also numerous class actions on foot, however there will be fees associated with successful class actions – sometimes between 20 and 30 per cent of the class action award is kept by litigation funders.”

Originally published as South Australians using new consumer remediation service to win refunds for dodgy fees