The Federal Court has ordered superannuation trustee OnePath Custodians Pty Ltd (OnePath) to pay a $5 million penalty for making false or misleading representations about its right to continue charging fees, and for failing to provide services to members efficiently, honestly and fairly due to its misleading conduct and by deducting fees when not entitled to do so.
This is the second fees for no service-related penalty decision obtained by ASIC within a week after Mercer Financial Advice was penalised $12 million for charging fees to customers it was not entitled to charge (23-314MR).
The Court found that between December 2015 and November 2021, OnePath made false or misleading representations to members of the superannuation product ‘Integra Super’ about Adviser Service Fees and deducted $3.8 million in fees from members for advice services they did not receive.
OnePath told members they had to pay a fee for advice from a ‘Plan Adviser’ even after the member had been transferred to a division of Integra Super where they were not entitled to receive advice services.
ASIC Deputy Chair Sarah Court recently announced that member services failures and misconduct resulting in the erosion of superannuation balances will be enforcement priorities for ASIC in 2024.
‘This case highlights the importance of a super trustee charging fees correctly and providing accurate, clear and timely information to members about superannuation fees. Members should be confident that their retirement savings are not reduced over time by superannuation trustees making deductions from their accounts they are not entitled to make.
‘ASIC will continue to focus on misconduct that results in the erosion of super balances,’ said Deputy Chair Court.
OnePath also misled members by representing that:
- the member had agreed to the fee, when it had been agreed between the Plan Adviser and the member’s former employer; and
- the negotiation of the fee was a matter for the member’s former employer and the Plan Adviser, even though the member had their own right to cancel the fee.
During this period, OnePath issued letters to approximately 766 members and annual statements to approximately 15,962 members, containing the false or misleading representations.
OnePath admitted to the conduct and agreed to a penalty of $5 million. The Court also ordered OnePath to publish a notice on its website regarding the breaches.
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Background
As at 31 December 2022, six of Australia's largest banking and financial services institutions have paid or offered a total of $4.7 billion in compensation to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice (23-057MR).
ASIC has previously taken civil penalty proceedings against the following entities for fees for no service-related breaches:
- Mercer Financial Advice, $12 million penalty (23-314MR);
- Westpac and related entities within the Westpac group, $40 million penalty (22-097MR);
- AMP Limited Group, $14.5 million penalty (21-191MR);
- National Australia Bank, $18.5 million penalty (21-226MR);
- Aware Financial Services, $20 million penalty (22-023MR).
For more information on how financial advice fees are charged and guidance for consumers on what to check for when reviewing fee disclosure statements, visit ASIC’s Moneysmart financial advice costs.
OnePath has repaid the $3.8 million in fees (plus interest) to affected members.
OnePath is a wholly owned subsidiary of Insignia Financial Limited (Insignia), formerly known as IOOF Holdings Ltd. Prior to February 2020, it was a subsidiary of Australia and New Zealand Banking Group Limited.