Millions of Aussies owed share in $1.6bn from financial service sector

“Wronged customers” are owed a share in billions of dollars due to mistakes from one sector of the economy.

Failures across the financial system which haven’t been remediated have meant there is still $1.6bn owed to Australian consumers, according to the Australian Securities and Investments Commission.

There are an estimated 2.7 million Australians who are owed a share in the $1.6bn sum.

The most common issues flagged by ASIC are fees for no service misconduct, non-compliant advice, mis-selling “junk insurance” or failing to deliver on price discount promises.

More than $3.25 billion has been paid to more than 3.4 million customers for failures in the financial system. Picture: NCA NewsWire / Nikki Short

The “onus” is now on the financial services industry to “get on with fair and timely remediations – returning the money they owe to wronged customers,” says ASIC deputy chair Karen Chester.

ASIC has been monitoring 36 remediation activities as of June 2022 across superannuation, advice, credit, banking and insurance.

More than 3.4 million consumers have already been paid $3.25bn, however, there is still an estimated $1.6bn yet to be returned to millions of Australians.

ASIC deputy chair Karen Chester says the ‘onus’ is on the financial services industry to pay back customers. Picture: Gary Ramage

‘Licensees must also do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation,“ Ms Chester said.

Ms Chester blamed “underinvestment in systems” for a “trifecta of failures”.

“First and foremost, in delivering on promises to consumers, second in identifying the failures and third in being able to remediate consumer loss in a timely way,” she said.

Remediation for fees for no service misconduct or non-compliant advice has seen payments or offers of $3.6bn in compensation to over 1.4 million consumers.

“Going forward, while ASIC may need to intervene in some isolated cases, we cannot and should not oversee remediations in order for consumers to receive fair and timely outcomes.”

ASIC has overseen the remediation of at least $5.6bn for an estimated seven million Australians in the past six years.

Around $3.6bn has been paid or offered to more than 1.4 million consumers in remediation for no service misconduct or non-compliant advice.

ASIC has also overseen the insurance industry paying $1.3bn to consumers for “mis-selling junk insurance, failing to deliver on price discount promises and poor sales practices”.

The commission on Tuesday released a regulatory guide for financial firms to push them to remediate their customers “quickly and effectively”.