From Amex to Perpetual: The big firms on ASIC radar
As the year wraps up, Money Management reviews the companies that were put under the microscope by the Australian Securities and Investments Commission (ASIC) in the second half of 2022.
This included firms facing various actions from infringement notices to interim stop orders.
1) Vanguard
Three infringement notices were issued to investment manager Vanguard in December for alleged greenwashing.
ASIC was concerned the product disclosure statements for the Vanguard International Shares Select Exclusions Index Funds were misleading. It suggested the statements excluded certain investments in tobacco by excluding manufacturers but did not exclude companies involved in the sale of tobacco products.
Vanguard ultimately shelled out $39,960 in compliance with the infringement notices.
2) American Express
Earlier in December, proceedings in the Federal Court against American Express Australia (Amex) were ASIC’s first civil penalty case alleging breaches of design and distribution obligations.
The case related to two credit cards issued by Amex that were co-branded with retailer David Jones, which allegedly charged higher cancellation rates for consumers in David Jones stores. The target market determination (TMD) was also not clear with consumers that it was a credit card and not a loyalty card.
3) Perpetual
In November, interim stop orders were placed on two Perpetual funds because of deficiencies in their target market determinations (TMDs).
Concerns were raised that Perpetual had not appropriately considered the significant risks in determining the wide target markets for Perpetual Pure Microcap Fund and the Perpetual Geared Australian Share Fund.
ASIC also considered that the TMDs did not meet the appropriateness requirements under design and distribution obligations (DDO) because they did not include any distribution conditions.
4) CBA / Colonial
ASIC appealed the Federal Court’s decisions to dismiss proceedings against Commonwealth Bank of Australia (CBA) and Colonial First State Investments for breach of conflicted remuneration laws in September.
It alleged they breached conflicted remuneration laws with the agreement in which Colonial paid CBA to distribute its Essential Super product through the bank’s branches and digital channels. Essential Super was distributed to over 390,000 individuals.
The proceedings commenced in June 2020 and were dismissed by the Federal Court in September 2022. ASIC appealed the decision in October 2022.
5) NAB
The Federal Court found NAB continued to charge customers periodic payment fees despite the knowledge that overcharging was occurring.
ASIC alleged NAB overcharged almost 4,874 personal banking and 913 business banking customers a total of $365,454 in periodic payment fees between 2015 and 2019.
By April 2021, NAB had paid around $8.3 million in remediation to affected customers while a hearing on relief and penalty is scheduled for 6 June, 2023.
6) AMP
Five companies that are or were part of AMP were ordered to pay a total $14.5 million in penalties at the end of September for charging fees for services that were not provided to 1,452 superannuation members.
The members had been paying financial advice fees through an agreement between AMP and their employers and were still charged fees after leaving the employer and not having access to the advice services.
The Court found AMP failed to investigate whether or not there was a systemic issue despite numerous complaints and ordered that AMP publish an adverse publicity notice on its websites for one year.
7) Dixon Advisory
In September, a $7.2 million penalty was imposed on Dixon Advisory for six representatives who failed to provide advice appropriate to their clients’ circumstances and failed to act in their clients’ best interests on over 50 occasions between 2015 and 2019.
The Court found Dixon Advisory was the responsible licensee of these six representatives who advised eight clients to acquire, roll-over or retain interests in the US Masters Residential Property Fund (URF) and URF-related products.
In addition to the penalty, Dixon Advisory was also ordered to pay ASIC’s legal costs of $800,000.
8) Mercer Financial Advice
Civil penalty proceedings commenced at the end of June against Mercer for failing to provide fee disclosure statements and making false or misleading representations to customers about fees charged and services that were not provided between 2016 and 2019.
ASIC alleged Mercer had made false or misleading representations on more than 5,500 occasions and failed to provide fee disclosure statements, or provided inaccurate statements, to more than 2,100 customers.
Mercer made compensations of over $45 million through a remediation program for more than 3,400 customers affected between 2012 and 2019.
AUTHOR
Rhea Nath
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The corruption of ASIC is sickening....Not a Union Super fund among them, yet they're some of the most evil, incompetent, lying Super Funds around. Some even make AMP look like Choir Boys.