Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Banks vow to stop charging dead people

AAP  |  10 Oct 2018Text size  Decrease  Increase  |  
Email to Friend

Page 1 of 1

A refreshed banking industry code will aim to stop banks charging dead people and ensure they only extract fees from customers in exchange for services actually provided.

The Australian Banking Association has updated its code of practice to end "fees for no service", stop charging dead customers and to refund any fees incorrectly levied, and to support changes to the 2013 future of financial advice reforms to remove all legislative provisions allowing grandfathered payments and trail commissions.

The voluntary charter comes into force on July 1 next year and the changes come in response to the damning interim findings of the banking royal commission, released almost two weeks ago.


The big four banks have already said they have already said they will end grandfathered commissions on wealth products.

The ABA says banks will ask customers what financial advice they required and only charge for what is provided, stop or refund fees for products or services no longer required by customers who have died, and to support legislative changes to the FOFA reforms regarding provisions for grandfathered payments and trail commissions.

The Australian Securities & Investments Commission has already approved the code of practice.

"It has always been unacceptable for any organisations to charge fees without providing a service," ABA chief executive Anna Bligh said in a statement on Tuesday.

"This announcement will put beyond the shadow of a doubt that this practice has no place in Australia's banking industry."

Bligh said latest ASIC data indicates customers will receive more than $1 billion in refunds for fees charged for no service.

"This issue of charging fees without service, particularly when customers have recently died, was raised during the royal commission and identified as unacceptable," Bligh said.

"When someone loses a loved one, they need support and compassion as they finalise their loved one's financial affairs."

She said ending provisions for grandfathered commissions would help end conflicts of interest between customers' best interests and incentives for advisers.



AAP logo image

© [2018] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend