Australia’s Financial Sector Is Set To Pay Out $7.2bn To Customers For Wrongdoing, According To The Country’s Regulator

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The Australian Securities and Investments Commission has published a guide for compensating staff, which instructs firms to pay promptly.

$7.2 billion in compensatory damages is what the corporate regulator says banks and other financial institutions will have to pay as a result of their misconduct towards customers.

The Australian Securities and Investments Commission’s deputy chair, Karen Chester, said the agency would like to avoid its hands-on role in cleanup plans, which began in the mid-2010s after widespread misconduct was first revealed.

The regulator published a new regulatory guide for remediation programs on Tuesday, which Chester said she hoped “draws a line in the sand” for ASIC.

“The new guide is an important step in ASIC’s work to improve customer outcomes and enhance confidence in the financial services industry,” Chester said.

“It provides greater clarity for firms about our expectations of how they should design, implement and operate their remediation programs.”

ASIC has taken enforcement action against several financial institutions, including the Commonwealth Bank, Westpac and National Australia Bank, over their customer remediation programs.

In December 2018, ASIC launched legal action against Westpac for “unconscionable and deceptive conduct” in handling customer complaints—the case is ongoing.

The new guide sets out ASIC’s expectations for how financial firms should design, implement and operate their remediation programs. It includes principles for good customer outcomes, such as fairness, transparency and accountability.

ASIC said it would assess whether firms complied with the guide when it reviews their customer remediation programs.

Furthermore, ASIC believes total remediation compensation has already topped $5.6 billion, paid out to roughly 7 million clients, with another $1.6 billion owing to 2.7 million more customers.

“Firms should expect that ASIC will take action where we identify failings in their customer remediation programs,” Chester said.

The royal commission, led by Kenneth Hayne, has been investigating the financial services sector since February 2018. It has heard evidence of widespread misconduct, including by the banks, insurance companies and superannuation funds.

ASIC likewise encourages businesses to pay their victims automatically rather than requesting that they respond to a request to participate in a cleanup program, as scams are rampant.

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