ASIC has commenced action in the Federal Court in South Australia focused on the promotion of the MobiSuper Fund, a division of the Tidswell Master Superannuation Plan (Fund). The action is against:
- Tidswell Financial Services Ltd (Tidswell), an Australian financial services (AFS) licensee and superannuation trustee;
- MobiSuper Pty Limited (Mobi), the promoter of the MobiSuper Fund;
- Mobi’s AFS licensee ZIB Financial Pty Limited (ZIB); and
- Andrew Richard Grover, a director of Mobi and ZIB.
ASIC is concerned about potential harm to consumers if professional superannuation trustees fail to adequately monitor the activities of their promoters. Trustees have responsibilities in relation to the actions of their promoters.
ASIC is concerned that Tidswell and ZIB failed to do all things necessary to ensure the financial services covered by their respective AFS licences were provided efficiently, honestly and fairly. ASIC also alleges that both Tidswell and ZIB failed to adequately monitor Mobi’s promotion of the Fund through a purported ‘general advice model’ that had insufficient regard for consumers’ best interests. Further, ASIC alleges false and misleading statements were made about superannuation, insurance products and services.
ASIC claims that Mobi offered an obligation-free ‘lost super’ search to consumers through internet advertising campaigns with the primary objective to get consumers to join the Fund and roll their other super balances into Mobi-promoted products.
ASIC further alleges that, in marketing telephone calls to consumers, Mobi customer service officers (CSOs) made misleading claims about fee savings and equivalent insurance cover if consumers joined the Fund and provided personal advice that was not in consumers’ best interests.
ASIC is seeking civil penalties against:
- Tidswell and ZIB for advice given to consumers by Mobi CSOs in breach of the best interest obligations;
- Mobi and Mr Grover for the misleading internet advertising campaigns; and
- Mobi for the false and misleading claims made by CSOs during marketing calls.
ASIC is also seeking various declarations, including under the Corporations Act that Tidswell and ZIB failed to comply with their obligations as AFS licensees and under the ASIC Act that Mobi engaged in (and Mr Grover was knowingly concerned in) misleading conduct.
This action has been taken following consultation and collaboration with APRA, which also has responsibility for regulating Tidswell under the SIS Act. APRA has supported ASIC with its investigation and has provided ASIC with a delegation of certain functions and powers under the SIS Act in relation to Tidswell in order to achieve appropriate regulatory outcomes.
The proceeding will be listed for case management on a date to be determined by the Court.
Background
Tidswell is a subsidiary of Sargon Capital Pty Ltd, which offers financial technology and infrastructure services including superannuation trustee services and responsible entity services.
Tidswell holds an extended public offer entity RSE Licence under the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), which allows it to operate a professional trustee business. Tidswell also holds an AFS licence issued by ASIC. Tidswell partners with promoter companies to generate revenue by offering new superannuation products to consumers. Although Tidswell operates the superannuation fund, the promotion and marketing of theffund is undertaken by the promoter.
As trustee of the Fund, Tidswell contracted Mobi to promote the Fund to prospective members. Mobi provided financial services as an authorised representative of ZIB.
ASIC and APRA work together to ensure that superannuation trustees such as Tidswell meet both their prudential and conduct obligations. ASIC and APRA support innovation in superannuation and acknowledge the place of professional trustees in bringing new and innovative products to the market, provided this is done in a way that prioritises the best interests of members.
APRA shares ASIC’s concerns and has engaged with ASIC during the investigation. ASIC will continue to consult with APRA in relation to the proceedings following the delegation of APRA’s powers. APRA fully supports ASIC in respect of action it takes to hold professional trustees to account for any potential harm to consumers caused by the conduct of their outsourced service providers.
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Editor's note:
The First Case Management hearing was held before Justice White in the Federal Court of Australia South Australia Registry on 21 November 2019 at 9:00am. The matter is adjourned to a Case Management hearing on 6 March 2020.
Editor's note 2:
The Second Case Management hearing was held before Justice White in the Federal Court of Australia South Australia Registry on 6 March 2020 at 9:00am. The orders made included that any interlocutory applications by the parties will be heard on 16 April 2020 and a further case management hearing is listed for 23 September 2020.
Editor's note 3:
On 30 March 2020, Justice White made orders in chambers, including varying the date of the case management hearing to 30 October 2020. On 6 April 2020, Justice White made further orders in chambers, including varying the date on which the interlocutory applications will be heard to 22 April 2020. On both occasions the parties have been given leave to appear by video link.
Editor's note 4:
On 22 April 2020, the hearing proceeded for mention only, via video link. Justice White made further orders setting a timetable for interlocutory applications with any argument to be heard on 19 May 2020. The next case management hearing remains on 30 October 2020.
Editor's note 5:
The case management hearing scheduled for 30 October 20 was vacated and re-listed for 7 December 2020.
Editor's note 6:
At a case management hearing on 7 December 2020, the matter was further adjourned until 4 February 2021.
Editor's note 7:
On 4 February 2021, the matter was adjourned for a further case management hearing and argument on 25 February 2021.
Editor's note 8:
On 25 February 2021, the matter was adjourned for a trial on liability as between ASIC and MobiSuper Pty Limited (First Defendant), ZIB Financial Pty Limited (Second Defendant) and Andrew Richard Grover (Fourth Defendant). The trial is scheduled to commence on 17 November 2021 (13 days), resuming on 13 December 2021 (2 days).
The Court also ordered that the allegations of liability and the grant of any remedy against Tidswell Financial Services Limited (Third Defendant) be determined separately, and by a different judge.
Editor's note 9:
On 22 June 2021, submissions were made in relation to the allegations of liability against Tidswell Financial Services Limited (Third Defendant) and the grant of any remedy, with ASIC and the Third Defendant ordered to confer, with a view to filing further information. No further hearing date was set.
Editor's note 10:
On 13 December 2021, submissions were made in relation to the allegations of liability against MobiSuper Pty Limited (First Defendant) and ZIB Financial Pty Limited (Second Defendant), and the grant of any remedy. No further hearing date was set.