On 27 July 2021, the Federal Court made declarations that Tidswell Financial Services Ltd (Tidswell), failed to act efficiently, honestly and fairly when providing financial services.
The Court found that between 30 November 2016 and 14 February 2018, while it was a superannuation trustee, Tidswell:
- failed to adequately monitor MobiSuper Pty Ltd (Mobi), the promoter one of its superannuation sub-funds, to ensure business model risks were addressed, including prevention of false or misleading representations and the risk of giving unauthorised personal advice; and
- failed to comply with Prudential Standard SPS 231 Outsourcing as issued by the Australian Prudential Regulation Authority (APRA).
Justice Jackson made orders by consent that Tidswell had breached s912A(1)(a) of the Corporations Act and dismissed by consent ASIC’s remaining claims against Tidswell.
ASIC Deputy Chair Sarah Court said, ‘Superannuation represents the future financial security of Australians and as the conduct regulator for superannuation, ASIC is dedicated to promoting trust and confidence in the superannuation system’.
‘ASIC will continue to work to ensure trustees comply with their obligations to properly monitor the promotion of their products by outsourced service providers.’
ASIC’s court action against Tidswell, Mobi, ZIB Financial Pty Ltd (ZIB) and Andrew Grover (a director of Mobi and Zib) was commenced following consultation and collaboration with APRA. Upon request from Tidswell, APRA cancelled Tidswell’s Registrable Superannuation Entity (RSE) licence on 30 June 2021.
Justice Jackson stated that ‘a superannuation trustee cannot outsource its responsibilities to the present and potential members of its superannuation funds. Depending on the circumstances, it will often be necessary for the trustee to take active steps to make sure that the functions performed on its behalf by others are performed in the best interests of members’.
Justice Jackson further noted that Tidswell ‘needed to monitor what Mobi actually did, including how it marketed its services on its websites after initial approval for the websites was given, and what the CSOs (customer service operators) said to individual consumers’.
ASIC’s court action against Mobi, ZIB and Andrew Grover is set for trial in November 2021 and alleges that Mobi offered an obligation-free ‘lost super’ search to get consumers to join and rollover their super into the Mobi sub-fund. ASIC also alleges that Mobi customer service representatives made misleading claims about fee savings and equivalent insurance cover and provided personal advice that was not in consumers’ best interests (19-301MR).
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Background
At the time of Tidswell’s conduct, contravention of section 912A did not carry a penalty but as a result of recent law reform, had Tidswell’s conduct occurred today, it would carry a penalty.
Tidswell is an Australian financial services (AFS) licensee and at the relevant time was an RSE licensee and superannuation trustee. APRA jointly regulated Tidswell and supported ASIC with its investigation, providing ASIC with a delegation of certain functions and powers under the Superannuation Industry (Supervision) Act 1993 (Cth).
On 1 January 2021, legislative reforms expanded ASIC’s role as conduct regulator for superannuation, and increased ASIC’s consumer protection powers. The reforms facilitate more effective regulation of superannuation trustee conduct.