Mercer Financial Advice has been ordered by the Federal Court to pay a $12 million penalty for fees for no service and failures in its fee disclosure obligations.
The civil penalty proceedings were commenced by ASIC last June.
The Federal Court ordered the firm to pay the fine after it was ruled it had breached sections of both the Corporations Act and ASIC Act over a three-year period from 1 July 2016 to 30 June 2019 when it:
- Failed to invite more than 800 clients to attend annual review meetings, despite those clients being entitled to attend the meetings,
- Failed to provide fee disclosure statements to over 500 clients,
- Issued over 3000 non-compliant fee disclosure statements to more than 2,000 clients, and
- Charged 761 clients a combined total of more than $4.7 million in fees for services clients did not receive.
The Court found that Mercer’s failures were caused by having inadequate systems and processes in place to ensure that its fee disclosure statements complied with financial services laws.
Mercer was also found to have breached its obligation to provide financial services efficiently, honestly and fairly.
ASIC deputy chair, Sarah Court, said: “This is a significant penalty for a financial advice provider. Mercer failed in its obligation to provide fee disclosure statements to clients, provided misleading information in the disclosure statements it did provide, and charged its clients fees for services it was not entitled to charge.
“These failures occurred in part because Mercer failed to maintain the necessary systems and processes to ensure that the disclosure statements sent to customers were timely and accurate.
“ASIC expects businesses to invest properly in their compliance systems. As today’s outcome shows, if they fail to do so, they face significant penalties.”
Mercer has previously undertaken a remediation program for more than 3,400 customers who were charged fees for financial advice that may not have been provided between January 2012 to June 2019, resulting in compensation of approximately $45 million.
