The Australian Securities and Investments Commission (ASIC) has today commenced its third and fourth legal actions over 'fees for no service' (FFNS) behaviour, this time with StatePlus Super, Asgard Capital Management and BT Funds Management in the firing line.
Like ongoing cases launched over the past couple of years against National Australia Bank (ASX: NAB) and two of its wealth management companies, the latest civil penalty proceedings stem from the findings of the Royal Commission.
The corporate watchdog alleges State Super Financial Services Australia (StatePlus Super) charged fees to at least 36,592 members for advice it did not provide, with potential penalties of between $1.7-2.1 million per contravention if the fund is judged guilty.
ASIC alleges that from 1 April 2013 to 30 June 2018, StatePlus:
- charged at least 36,592 members fees for financial advice it promised to provide (Fees for No Service) but did not provide. This included the promise of an annual financial planning review (Annual Review) and to contact members as part of the Annual Review;
- issued defective disclosure documents or statements that included promises to provide annual financial advice to members in circumstances that StatePlus did not have reasonable grounds for believing it could provide;
- failed to establish and maintain the appropriate internal procedures, measures and controls to ensure that, as far as reasonably practicable, it could provide or would be able to provide the promised annual financial advice; and contravened its overarching obligations as an Australian financial services (AFS) license holder to act efficiently, honestly and fairly.
Shortly after filing these proceedings in the Federal Court, ASIC commenced another case against Westpac subsidiaries Asgard and BT.
The regulator alleges Asgard charged adviser fees to 404 customers for financial advice that was not given, and both companies of making misleading representations in half-yearly or annual account statements regarding the charging of the adviser fees.
ASIC alleges that from September 2014 to August 2017:
- Asgard charged customers around $130,006 for financial advice after requests were made for customers' financial advisers to be removed from their product accounts and after the advisers ceased providing advice;
- In relation to superannuation products for which it is trustee, BT issued account statements which appeared to show that adviser fees were no longer being charged while the 'adviser fee' line item was removed from the account statement, an amount equal to that fee was added to the administration fee amount;
- In relation to an investor directed portfolio service (IDPS) for which it is the issuer, Asgard issued account statements which appeared to show that adviser fees were no longer being charged while the 'adviser fee' line item was removed from the account statement, an amount equal to that fee was added to the administration fee amount;
- The wrongly charged fees were retained by Asgard as revenue; and
- Asgard contravened its overarching obligations as an Australian financial services (AFS) license holder to act efficiently, honestly and fairly.
ASIC Deputy Chair Daniel Crennan QC was reserved in his statement about the new cases.
"Today, ASIC has commenced a 'fees for no service' case against BT and Asgard as well as commencing a 'fees for no service' case against StatePlus Super," Crennan said.
"Both cases, which relate to superannuation, were subject to cases studies in the Royal Commission, were investigated by ASIC's Office of Enforcement and have been brought by ASIC to the Federal Court for determination."
Concise statements for the notices of filing can be found here for StatePlus Super and here for the Westpac subsidiaries.
ASIC is also overseeing FFNS remediation programs involving other financial services licensees including Bendigo Financial Planning Ltd, Police Financial Services Ltd (trading as BankVic) and Yellow Brick Road Wealth Management Pty Ltd.
Photo courtesy of Adz, via Wikimedia Commons.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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