ASIC has today commenced civil penalty proceedings in the Federal Court against State Super Financial Services Australia Limited (StatePlus) for charging at least 36,592 members fees for financial advice that StatePlus promised it would provide but did not provide.
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.
ASIC is seeking declarations and pecuniary penalties from the Federal Court.
The maximum civil penalty for contraventions alleged against StatePlus are between $1,700,000 and $2,100,000 per contravention for s12DI(3) (accepting payment without being able to supply as ordered).
StatePlus has remediated over $100 million to members affected by its conduct.
At the relevant time, StatePlus was the RSE licensee for the StatePlus Fixed Term Pension Plan and the StatePlus Retirement Fund (Funds). As at 30 June 2017, the Funds had over $17 billion under management in respect of over 75,000 members.
ASIC has been monitoring remediation for fees for no service failures by financial services institutions including StatePlus (18-229MR).
StatePlus’ conduct was the subject of a case study by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry – see Volume 2 (part 13) of the Final Report.
This is the third enforcement action commenced by ASIC concerning Fees for no service activity. In September 2018, ASIC commenced proceedings in the Federal Court of Australia against two entities in NAB’s wealth management division, NULIS Nominees (Australia) Limited (NULIS) and MLC Nominees Pty Ltd (MLC Nominees). The court proceedings relate to fees charged by both entities to a significant number of their superannuation members for services not provided. The hearing has concluded and judgment in these proceedings on liability and penalty has been reserved (18-259MR).
In December 2019, ASIC commenced civil penalty proceedings in the Federal Court against National Australia Bank Limited (NAB) for alleged contraventions of the ASIC Act and the Corporations Act for FFNS activity. These proceedings are being case managed by the court to trial, a date is yet to be scheduled (19-360MR).
The matter has been listed for a case management hearing before Justice Moshinsky in the Federal Court in Melbourne on 5 November 2020.
Editor's note 2:
The case management hearing scheduled for 5 November 2020 has been rescheduled to 9 November 2020. As of 1 September 2020, State Super Financial Services Australia Limited is now known as Aware Financial Services Australia Limited.
Editor’s note 3:
On 6 November 2020, the Court made orders by consent, including for the filing and serving of the defendant’s concise statement in response by 4:00 pm on 30 November 2020.
The hearing date for case management scheduled for 9 November 2020 has been vacated and listed for 9:30 am on 4 December 2020.
Editor’s note 4:
A case management hearing was held before Justice Moshinsky on 4 December 2020 at which procedural directions were ordered.
The next case management hearing is listed for 9.30 am on 23 April 2021.
Editor’s note 5:
On 18 March 2021, the Court made new procedural directions with the parties’ consent. The new directions extend the procedural timetable that was in place pursuant to the directions of 4 December 2020.
The next case management hearing is now listed for 9.30 am on 21 May 2021.
Editor’s note 6:
On 3 May 2021, the Court made directions extending the time for the parties to confer about the Statement of Agreed Facts, which is now due to be filed by 17 May 2021.
Editor's note 7:
A case management hearing was held before Justice Moshinsky on 21 May 2021. The procedural directions made at the hearing included that:
- the proceeding be referred to mediation to occur on or before 2 August 2021;
- the final hearing be listed on 14 June 2022 (for an estimated period of 9 days); and
- the next case management hearing be listed for 9.30 am on 3 December 2021.
Editor's note 8:
On 3 December 2021, a case management hearing was held before Justice Moshinsky. A further hearing will be listed in mid-February 2022.
Editor's note 9:
On 7 February 2022, the Court made orders listing the matter for hearing on 17 February 2022.