The big four banks and AMP charging customers for advice they didn’t receive isn’t just a case of a few bad apples, says fintech founder Chris Brycki.
“The whole system is broken,” says the CEO of Stockspot, an automated investment adviser.
“The same banks providing advice funnel people into their own products rather than providing the best advice.”
The corporate watchdog, ASIC, today released an update into its investigation, finding that more than 200,000 customers are due financial compensation for advice they were charged for but didn’t receive.
So far, 27,000 customers have shared in $23.7 million paid out by the banks. ASIC expects compensation to increase by $154 million, plus interest, to another 176,000 customers, bringing total compensation to more than $178 million.
In its report, Financial advice: Fees for no service, ASIC said: “AMP, ANZ, CBA and NAB have all identified systemic issues in relation to the charging of ongoing advice fees.”
Brycki says there are grounds to investigate the fees charged on the investment products managed by the banks and AMP
“Our recent Fat Cat Funds Report suggests thousands of bank customers are being recommended bank-aligned investment products even if there are other more appropriate products available,” he says.
The report analyses 3,820 funds, highlighting high fees, poor transparency and conflicts of interest in Australia’s investment industry.
The report shows more than $59 billion is trapped in such funds and that the big four banks, plus AMP, operate the majority of them.
Brycki argues that bringing the CEOs of the big four banks before a parliamentary committee to answer questions has done little to tackle the issues.
“How can ‘best interest duty’ be met when clients are being recommended high fee, poor performing products as well as being charged for advice they haven’t received?” he says.
“We desperately need a Royal Commission to understand the impact vertical integration and misaligned incentives have on the behaviour of the banks — it is costing Australians millions.”