ASIC has given the banks a must-do-better report on the financial planner problem

Cameron Spencer/ Getty Images.

Australia’s banks, despite assurances of stricter controls, still have problems with the way they manage their financial advisers.

The corporate regulator, ASIC (Australian Securities and Investments Commission), says the financial institutions are delaying reporting serious non-compliance concerns and aren’t doing adequate background checks when they employ financial planners.

ASIC today released its review of how the big four banks — the Commonwealth, ANZ, NAB, Westpac — and AMP oversee their advisers. The review started in July 2015 after a series of scandals involving dodgy financial planning advice.

“This report card is not one as yet you will be overly pleased to show your parents,” says ASIC deputy chairman Peter Kell.

The review found significant delays between becoming aware of misconduct and reporting it to ASIC.

ASIC also found that background and reference-checking on advisers is inadequate. Kell says ASIC will “publicly name and shame” those not doing the checks when hiring an adviser.

And ASIC says the audit processes to assess whether advice is in the best interest of the client is also inadequate.

“Failure or delay in notifying ASIC of suspected serious non-compliant conduct significantly affects our ability to take appropriate enforcement or other regulatory action,” says Kell.

“More importantly, it may also result in an increased risk of customer detriment as so-called bad apple advisers continue to work in the industry.”

The review looked at how the banks identified and dealt with non-compliant conduct by their advisers between January 2009 and June 2015.

ASIC has banned 26 advisers identified in the review. Investigations and surveillance is continuing into the activities of others.

A total of $30 million has been paid to 1,347 customers who suffered loss from poor advice.

This amount is on top of the “fee for no service” compensation payments which are expected to reach more than $178 million.

ASIC acknowledged the work undertaken by the financial institutions to improve their practices, supported by recent legislative and regulatory reforms.

“However, there is further work to be done to assist in re-building consumer trust and confidence in the financial advice industry,” says Kell.

“It is critical that customers are able to get financial advice they can trust.”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.