Registrable superannuation entity (RSE) licensee, Avanteos has been imposed with additional licence conditions after it charged fees to thousands of deceased super members by the Australian Prudential Regulation Authority (APRA).
In an announcement, APRA noted that it had been liaising with the Australian Securities and Investments Commission (ASIC) and that it did not rule out ASIC taking further action against Avanteos.
Avanteos charged adviser service fees to 2,234 deceased members between 2003 and 2018, and the total financial impact was more than $6 million. The case was referred to APRA in February by the Royal Commission after Avanteos self-reported the issue to APRA in May 2018. Avanteos had remediated all affected accounts.
APRA deputy chair, Helen Rowell, said charging fees for financial advice to deceased members, whether intentional or not, was a breach of super licensees’ legal obligations.
“However, by imposing additional licence conditions, we are ensuring Avanteos is held accountable, and that any ongoing weaknesses in governance or internal controls are identified and remedied. That is especially important until such time that Avanteos has rectified the internal controls and weaknesses that allowed these breaches to occur,” she said.
“APRA has been liaising with the Australian Securities and Investments Commission (ASIC), which continues to conduct its own investigation into these matters. We don’t rule out taking further action against Avanteos should ASIC’s inquiries raise additional matters of prudential concern.”
APRA has imposed a range of additional licence conditions on the firm designed to avoid such breaches from reoccurring.
The historic nature of these breaches meant APRA was unable use new civil penalty provisions under the Superannuation Industry (Supervision) Act 1993, which only came into effect in April this year.
Comments
Surely every business in the world that charges any sort of ongoing fee must technically charge fees to dead people at some point. It's simply impossible for businesses to turn their client's fees off the second they are pronounced dead. How do they know? Isn't it a sensible and reasonable approach to turn the fees off once they get a copy of the client's death certificate, and then refund any fees paid since date of death?
I don't know the specifics of the Avanteos case but there were certainly examples from the Royal Commission where this sensible approach was adopted and no client (or their estate) was in any way disadvanteged, yet the media chose to be hysterical and deliberately misleading about it. Is this another example of regulators using any ridiculous excuse to persecute financial service providers, and leverage the media as a tool of vilification?
Will the ISA network soon be refunding intrafund advice fees to dead people or will it take a class action?
Another one.
Hedware, do your union super funds have a system in place to turn fees off the second one of their members drops dead? Then they are guilty too. It's not another one, it's every one. It's impossible to avoid, and ludicrous to imply otherwise.
You know more about industry funds than I do and so you are best placed to know the answer.
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