A former subsidiary of Commonwealth Bank has been penalised $1.7 million for failing to update defective disclosure statements.
The defective disclosure related to the charging of fees to superannuation members after their death, when it was known that Avanteos, which traded as Colonial First State Custom Solutions, did not have lawful authority to do so.
The Australian Securities and Investments Commission (ASIC) found 499 deceased members with funds in Avanteos superannuation products were charged $700,000 in fees when the firm was not entitled to do so.
The organisation was convicted and penalised a total of $1,710,000 by the County Court of Victoria. It had pleaded guilty to 18 counts in December 2021.
Avanteos had remediated all affected customers’ estates.
ASIC deputy chair, Sarah Court, said: “This is the first criminal prosecution for failing to update defective disclosure statements, and it should be seen as a warning to the industry to act on advice and rectify problems quickly, or face possible criminal action.
“This matter was particularly serious because senior managers within Avanteos were aware that it did not have the authority to deduct fees from its members after their death. Despite this knowledge, there were no changes made to Avanteos’ disclosure documents and the unlawful fees continued to be charged for over two years.”
Avanteos was a wholly-owned subsidiary of the Commonwealth Bank of Australia when the misconduct occurred. Since 1 December 2021, KKR has been the majority shareholder of Avanteos.
Avanteos’ conduct was the subject of evidence given at the Financial Services Royal Commission.
The matter was prosecuted by the CDPP after an investigation and referral by ASIC.
