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Australia regulator clears 8 banks after review of sales practices

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Australia regulator clears 8 banks after review of sales practices

Australia's markets regulator cleared eight banks of any systemic misconduct of the type seen in the case of Wells Fargo & Co. in the U.S. in late 2016.

The Australian Securities and Investments Commission said Aug. 1 that it did not find evidence of systemic misconduct among eight banks after reviewing results of audits of their sales practices. The audits, which were required by the regulator, were designed to identify if the banks had aggressive sales targets that forced bank staff to act illegally by issuing products without customers' knowledge or consent.

The eight banks are Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd., Commonwealth Bank of Australia, Westpac Banking Corp., Bank of Queensland Ltd., Suncorp-Metway Ltd., Citibank NA and HSBC Holdings Plc.

Wells Fargo was fined US$100 million in late 2016 after U.S. regulators found that the bank's staff illegally opened as many as 2 million customer accounts since 2011.

ASIC said it found that the banks had adequate controls to identify and prevent misconduct. However, the regulator said the sale of consumer credit insurance was at heightened risk of sale without proper customer consent. There were also potential weaknesses in account opening and activation controls and record keeping in relation to consumer credit insurance.

Following the audit, the regulator said it will be working with the banking industry and consumer advocates to establish a consumer credit insurance working group. The group will work on a range of reforms, including a deferred sales model for consumer credit insurance sold with credit cards.