ASIC has today commenced civil penalty proceedings in the Federal Court against Asgard Capital Management Limited (Asgard) for charging adviser fees to 404 customers for financial advice that was not provided and also against Asgard and BT Funds Management Limited (BT) for 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 said, ‘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. 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.’
ASIC is seeking declarations and pecuniary penalties from the Federal Court to prevent similar contraventions occurring in the future.
BT and Asgard are part of the Westpac Group.
BT is the trustee and RSE licensee for:
- Asgard Infinity eWRAP Pension Account;
- Asgard Infinity eWRAP Super Account;
- Asgard Open eWRAP Pension Account;
- Asgard Open eWRAP Super Account;
- Asgard Rollover Service;
- Asgard Superannuation Account; and
- Asgard Employee Superannuation Account (Super Funds).
Asgard is the custodian and administrator for the Super Funds, as well as the issuer and administrator for the Asgard Infinity eWRAP Investment Account (IDPS product).
BT and Asgard’s conduct were 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.
The Royal Commission found that between 2001 and August 2017, BT and Asgard charged around 767 members fees for financial product advice that was not provided. Between December 2017 and March 2018, Westpac remediated $634,490 to the members.
ASIC’s action is in respect of the conduct that occurred within the last six years, being within the limitation of the action period.
This is the fourth 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).
In August 2020, ASIC commenced civil penalty proceedings in the Federal Court against State Super Financial Services Australia Limited (StatePlus) for charging at least 36,592 clients members fees for financial advice that was not provided (20-189MR).
The matter has been listed for a case management hearing before Justice Moshinsky in the Federal Court in Melbourne on 6 November 2020.
Editor's note 2:
On 6 November 2020, the Court ordered the filing of a statement of agreed facts and any material both parties will rely upon in relation to penalty and other relief. The matter is to be listed for a penalty hearing in the Federal Court on a date to be fixed.
Editor's note 3:
The matter has been listed for a penalty hearing before Justice Wheelahan in the Federal Court in Melbourne on 22 July 2021.