Analyst estimates $6 billion remediation bill for Big Four Banks and AMP
Shaw and Partner’s banking analyst Brett Le Mesurier estimates of at least $6 billion payments from big four banks and AMP Limited in respect of customers refunds, remediation, review and litigations.
It has been analyzed that Commonwealth Bank will rank first in infringements with the maximum estimated remediation of $2.3 billion, followed by ANZ Bank with second highest remediation costs of $1.2 billion. While AMP is forecasted to rank third in a row of banking scandals with estimated $1.17 billion refunds and remediation cost, Westpac’s remediation bill ranks fourth at an approximate $1 billion. National Australia Bank is likely to become the fairest among all.
Le Mesurier’s estimations for remediation costs has been placed on a pre-tax basis and takes into consideration the cost of programs execution and forecast for fiscal 2019. It comes after royal commission into banking sector unveiled the shoddy practices undertaken by banks, including fees-for-no services, non-compliance of law, charging to the dead, investing retirees’ super funds, and providing lower than industry standard rates.
CBA is dragged to the first position on the streak of its fraudulent practices unraveled by the regulators. Recently, the law firm Slater and Gordon has filed its first-class action under “Get Your Super Back” campaign against CBA and its wealth management group Colonial First State, accusing them to be involved in investing retirement savings of its superannuation members and paying lower than market standard interest rates.
However, the latest disclosure of CBA’s Dollarmites scam has almost burnt the bank to ashes. In recent investigations it has been found that children’s Dollarmite accounts have been fraudulently used by the Bank’s staff members to earn bonuses and achieve the targets. However, the series of crimes committed by CBA does not ends here, previously it has been accused of money laundering and litany of delays and denials in its insurance claims.
For ANZ Bank, the analyst belief the major chunk of money to be spend on remediation relating to banking products which included over $200 million spent on customer remediation in 2017 and the first half of 2018. While it has been forecasted that further $300 million will be spend in second half of 2018 in respect of customer remediation.
Hayne Royal Commission triggered five separate class actions against AMP as it has been deliberately charging fees for no services. It has also been accused of charging insurance premium to the dead against which it is required to refund over $1 million to its thousands of dead superannuation members who have been charged life insurance premium even after their deaths have come to the insurer’s notice. Further, Westpac has recently flagged a payout of $235 million to its customers over-charged for financial advices, including the cases where even no services were given.
The analyst expects that these estimates may surge even higher on the back of tougher rules and regulation getting formulated by corporate regulators, the explosion of legal fees cost, and interest payments on refunds and remediations.
In today’s trading session, 15 October 2018, AMP Limited’s stock was up by 0.328% to close at $3.060; CBA plunged 2.089% to $65.630; ANZ was down by 1.853% to close at $25.430; NAB fell 1.582% to last trade at $25.500; WBC was down by 1.588% to close at $26.030.
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