MY MONEY

The companies charging Aussies for refunds they are owed

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Services are popping up to assist consumers in getting refunds for fee for no service financial advice, junk insurance and other misconduct exposed by the Royal Commission - but they are doing it for a fee.

Remediator is one such service, launching just last year. People who think they may be eligible for a refund from the multi-million-dollar remediation programs being run by all of Australia's largest financial institutions can use Remediator to manage the refund process.

However, Remediator's fee is 20% of the refund amount plus GST (charged on a no-win-no-fee basis).

companies charging fees for remediation refunds

"The Banking Royal Commission exposed misconduct by banks and some financial advisors. Now thanks to its findings, they can help consumers claim back their money," says Remediator co-founder Claudia Virgona.

"Unfortunately, many consumers don't even know if they're eligible or where to start the process of investigating if they are. Remediator helps to solve that problem so it's an exciting development."

Testimonials from the company's website include Melissa from Western Australia who was refunded $4369 for advice fees charged when advice was never received and Deanne from Queensland who got $8445 worth of advice fees refunded.

The creation of such services has led some to question whether, when the institution was proven to be in the wrong in charging these fees in the first place, should others be allowed to charge consumers to get those mischarged amounts back?

A spokesperson for the Australian Securities and Investments Commission (ASIC) says that it does not regulate companies like Remediator (nor is it involved in every remediation program run by financial services companies).

"In most remediations, the company providing the remediation would be obliged to identify and contact affected customers.  However, there are likely to be a number of customers they are unable to reach and these people may avail themselves of companies like Remediator. That is a choice of the individual," the spokesperson for ASIC says.

"We note that people who think they be eligible for some kind or refund or remediation could make a complaint to the firm about whether they were affected/should have been remediated, and the firm would need to respond to that.  And of course, they can do this for free. If their concerns aren't adequately addressed, they can also seek redress through AFCA, again, for free."

AFCA - the Australian Financial Complaints Authority - says it is not necessary for individuals to be represented by third parties in order to access remediation.

"Our service is free for complainants to use and is independent and impartial. It is not usually necessary for either party to be represented by a third party as our process is designed to be simple and easy-to-use so that consumers can bring a complaint to AFCA without the need for assistance," a spokesperson for AFCA says.

AFCA says it does sometimes inform consumers that using a fee-charging representative to make their complaint is not in their best interests.

"We are aware of a number of specialised businesses that offer to represent complainants for a fee. It is open to complainants to use the services of such a representative in making a complaint to AFCA. However, these fee-charging representatives are frequent users of our service for certain types of complaints, and so we expect a higher standard from these services," the spokesperson says.

"For example, if a fee-charging representative does not comply with our requirements to provide the information requested in a timely way when the complaint is made, we may refuse to deal with the service. In this such cases, we will contact the complainant directly to continue to resolve their complaint."

AFCA also pointed out that free financial counselling services are available - for example, through the National Debt Helpline. Consumers can also make someone an authorised agent to represent them to AFCA and that agent could be a family member or friend or almost any trusted person.

Remediator recently appeared on A Current Affair, where Virgona says every Australian should make use of their service and see if they are eligible for remediation. The program featured several testimonials from clients of the service.

Jim Stackpool, managing director of Certainty Advice Group, also appeared on the program briefly - saying he thinks consumers should go to AFCA themselves rather than pay a fee.

"When handing down the findings of the Royal Commission, Justice Kenneth Hayne captured the sentiment of the hearings in one word - greed," Stackpool says.

"Remediator charges their 'clients' 20% of the refund obtained. They are using the very same conflicting remuneration models that the Royal Commission decried. This is more evidence of profits before people, typical of the long history of financial services where a few people continue to make a lot of money from other people's money and ignorance."

Legislation is currently on foot that would require debt management firms to be licensed and bring them under the authority of AFCA. However, Remediator says it is not a debt management firm and would not be covered under the legislation.

In December 2020, ASIC released a consultation paper on updating its regulatory guide in relation to consumer remediation. At the time, the regulator was monitoring over 100 remediations that could see $3.55 billion returned to over 3.6 million consumers.

This article first appeared on Financial Standard

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Elizabeth McArthur is a senior journalist at Financial Standard covering wealth management including financial advice. She has a bachelor's degree in journalism from UTS and a master's in creative writing from Melbourne University.
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