Australia’s financial sector will pay customers $7.2bn for wrongdoing, regulator says

theguardian.com:

The compensation banks and other financial institutions will pay as a result of their wrongdoing towards customers will reach $7.2bn, the corporate regulator says.

The deputy chair of the Australian Securities and Investments Commission, Karen Chester, said the regulator wanted to stop its hands-on involvement in remediation schemes – a program that’s been under way since the mid-2010s, when widespread misconduct in the sector was first uncovered.

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The regulator launched a new regulatory guide for remediation programs on Tuesday that Chester said she hoped “draws a line in the sand” for Asic.

“We don’t want oversighting remediation to be core business for Asic going forward,” she said.

Chester said by using the guidelines, financial services companies would be “able to get on with remediations in a decisive and confident way themselves and getting it done fairly, honestly and efficiently”.

“That’s not to say there may be some isolated cases where we may still need to oversight a remediation, but that should not be the default.”

Asic estimates that total remediation already paid has reached $5.6bn, paid to about 7 million customers, with a further $1.6bn due to 2.7 million customers.

Remediation schemes Asic has overseen include compensating victims of fee-for-no-service ripoffs in which banks and other institutions charged people for financial services such as advice that they never received, and people who bought junk insurance that was not able to be used and was sold using high-pressure tactics.

The 2018 banking royal commission also exposed practices such as charging fees to dead people.

Chester said Asic was continuing to keep a close eye on