ASIC commences civil penalty proceeding against three funds

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against StatePlus Super, BY Funds Management, and Asgard Capital Management for charging members fees for no service. 

The regulator found that between 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 said it would seek declarations and pecuniary penalties from the Federal Court, with the maximum civil penalty for contraventions alleged against StatePlus 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. 

ASIC said Asgard charged customers about$130,006 for financial advice after requests were made for customers’ advisers to be removed from their product accounts and after advisers ceased providing advice. 

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“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,” ASIC said. 

It noted that the wrongly charged fees were retained by Asgard as revenue and Asgard contravened its overarching obligations as an AFS license holder to act efficiently, honestly and fairly. 

“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,” ASIC said about BT. 

ASIC deputy chair, Daniel Crennan, 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”.