Banking royal commission: fees-for-no-service compensation bill mounts

Compensation paid by banks including AMP, ANZ, NAB and Westpac in the fees-for-no-service scandal could exceed $850m.

The compensation bill for major institutions accused of charging fees for no service continues to climb. Pic: AAP

Total compensation to be paid out to customers of AMP, ANZ, National Australia Bank, Westpac and StatePlus who were charged fees despite not receiving any service could exceed $850 million, according to the corporate watchdog.

The Australian Securities and Investments Commission today said these financial institutions have made provisions for future remediation payments in order to pay back customers who were charged fees but received no service in return.

It comes on top of compensation payments or offers by other wealth managers or banks exceeding $480m.

LIVE: Banking royal commission blog

The provisions detailed by ASIC come on top of an update that a separate grouping of the major wealth managers — AMP, ANZ, NAB, Westpac and Commonwealth bank — have now paid or offered customers $222 million for failing to provide financial advice to customers despite charging them for it, an increase of more than $6m since the last update in October last year.

ASIC also said it was now overseeing more compensation to be paid for the fees-for-no-service scandal from other companies such as Bendigo Financial Planning, Police Financial Services under the name BankVic, State Super Financial Services, which trades as StatePlus, and Mark Bouris’s wealth manager Yellow Brick Road. The total compensation paid or offered by these companies has now reached $260 million.

The fees-for-no-service scandal has damaged AMP’s reputation and share price after it was exposed by the royal commission. AMP tried to conceal its behaviour in a doctored report designed to be given to ASIC. AMP’s chief executive Craig Meller, chairman Catherine Brenner, along with other AMP board members, were all been forced to leave in the wake of the scandal.

NAB’s practice of charging fees where no services have been provided is currently being examined by the royal commission.