ASIC has commenced civil penalty proceedings in the Federal Court against superannuation trustee OnePath Custodians Pty Ltd (OnePath) for allegedly charging fees for no service and making false and misleading representations to fund members.
ASIC alleges OnePath incorrectly charged over $4 million in fees to more than 18,000 fund members when it was not entitled to do so.
ASIC Deputy Chair Sarah Court said, ‘Superannuation is important for the future financial security of Australians. Consumers must be able to trust they are being charged fees correctly by their superannuation providers. ASIC’s case alleges that OnePath failed to do so in this case.’
ASIC alleges that from 15 December 2015, OnePath charged financial advice service fees totalling $3,787,966.21 to 16,210 members who had been de-linked from their employer-sponsored superannuation plans. ASIC alleges that OnePath sent these members letters and annual statements until about May 2020 which failed to inform them of their rights regarding adviser service fees, including their right to terminate the fees.
ASIC further alleges that from December 2015 until about January 2019, OnePath incorrectly charged financial adviser service fees totalling $502,667.18 to 2,508 members who did not have a linked plan adviser. ASIC also alleges that OnePath sent annual statements to these members until about October 2019 representing it was entitled to deduct adviser service fees from their accounts and that they were obliged to pay.
ASIC claims that OnePath made false and misleading representations about its right to continue charging fees to these members, engaged in misleading or deceptive conduct and breached its obligations as a financial services licensee to provide services efficiently, honestly and fairly.
ASIC is seeking declarations, pecuniary penalties and other orders from the Federal Court.
The date for the first case management hearing is yet to be scheduled by the Court.
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Background
OnePath is the superannuation trustee of the OnePath MasterFund, through which it offers the Integra superannuation product. Employers established plans through the Integra product to provide their employees with superannuation. The employees became members of the OnePath MasterFund. As part of the Integra product, employers could appoint financial advisers to provide advice to employee members in exchange for a fee.
OnePath was a subsidiary of ANZ Limited until 31 January 2020 when it was sold to IOOF Holdings Ltd (IOOF), now known as Insignia Financial Limited. It has 847,896 superannuation member accounts and $35.1 billion in assets.
The ASIC/APRA-regulated superannuation industry, worth over $2.3 trillion, is a vital part of Australia’s financial system. ASIC commenced this proceeding because under the law, superannuation trustees must provide services efficiently, honestly and fairly. This involves ensuring their governance and assurance arrangements for fees charged to members’ superannuation accounts are robust and their members are charged fairly.
On 30 June 2021, ASIC and APRA jointly provided additional information to superannuation trustees to improve their oversight of advice fee deductions from member accounts. This follows earlier joint communications to reinforce the importance of trustees having in place strong governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members' superannuation accounts.
ASIC has prioritised enforcement investigations and remediation for consumers arising out of fees for no service conduct, which, as at 30 June 2021, had seen some of Australia’s largest banking and financial services institutions pay, or offer to pay, over $1.6 billion in compensation.
OnePath has advised that as of September 2021, ANZ and OnePath have paid more than $32 million in remediation for loss from mischarged adviser service fees. OnePath’s remediation program is substantially complete.
Editor's note:
A case management hearing has been listed for 3 February 2022.
Editor's note 2:
A further case management hearing has been set for 16 February 2022.
Editor's note 3:
A further case management hearing has been set for 17 May 2022.
Editor's note 4:
An Amended Concise Statement was filed on 10 February 2022.
Editor's note 5:
A further case management hearing has been set for 16 June 2022.
Editor's note 6:
The case management hearing listed for 16 June 2022 was vacated. A further case management hearing has been listed on 9 August 2022.
Editor's note 7:
Due to the Court’s availability, the hearing listed for 9 August 2022 has been moved to 18 August 2022.
Editor's note 8:
The case management hearing listed for 18 August 2022 was vacated. A further case management hearing has been set for 20 October 2022.
Editor's note 9:
The case management hearing listed for 20 October 2022 was vacated. The date of the next case management hearing is to be determined.
Editor's note 10:
The next case management hearing has been set for 15 December 2022.
Editor's note 11:
The hearing on 15 December 2022 was vacated. The next hearing has been listed for 21 March 2023.
Editor's note 12:
On 21 March 2023, the defendant was ordered to give discovery and to pay ASIC's costs of its application for discovery. The next case management hearing is listed on 22 June 2023. Download the Orders (PDF 292 KB).
Editor's note 13:
The case management hearing listed for 22 June 2023 was vacated. The next case management has been listed for 7 September 2023.
Editor's note 14:
The case management hearing listed for 7 September 2023 was vacated. The hearing has been set for 10:15am on 24 November 2023.