Former CommBank subsidiary pleads guilty to charging 499 deceased members fees

Former CommBank subsidiary pleads guilty to charging 499 deceased members fees

Investment management firm Avanteos Investments has today pleaded guilty to 18 criminal charges relating to failures to update disclosure statements and continuing to charge fees to deceased superannuation members.

The guilty pleas come as the Australian Securities and Investment Commission (ASIC) brings criminal charges against the firm which, at the time, was a subsidiary of Commonwealth Bank of Australia (ASX: CBA).

According to ASIC, Avanteos received legal advice in early 2016 that it did not have authority to deduct fees from superannuation members after their death.

Despite this, ASIC claims Avanteos did not update its disclosure statements and continued to deduct fees from deceased members until May 2018.

ASIC alleges that during the period disclosure statements for 18 superannuation products issued by Avanteos were defective, as they failed to tell superannuation fund members they would be charged adviser service fees after their death.

As a result of the alleged offending, ASIC says 499 deceased members with funds in these superannuation products were charged almost $700,000 in fees by Avanteos when it was not entitled to do so. Avanteos has remediated all affected customers. 

The matter is now being prosecuted by the Commonwealth Director of Public Prosecutions (CDPP), and Avanteos is facing a maximum penalty for each offence of $180,000. In total, this means the firms is facing a maximum of $3.24 million in penalties.

Shares in CBA are down 0.32 per cent to $97.32 per share at 11.53am AEDT.

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