BT Funds Management and Asgard Capital have been ordered by the Federal Court to pay $1.5 million each ($3 million) for charging fees-for-no-service and making misleading statements.
An Australian Securities and Investments Commission (ASIC) announcement said the court found that between September 2014 and August 2017, a total of 404 customers were harmed by BT’s and Asgard’s conduct.
The court held that on at least 487 occasions, BT and Asgard had contravened the ASIC Act, and the Corporations Act, by:
- Making false or misleading representations to customers in customer account statements that no deductions of ongoing adviser fees were being made from customers’ accounts after those customers requested to remove their financial advisers from their accounts; and
- Engaging in misleading or deceptive conduct by providing customers with account statements which did not show that BT and Asgard were continuing to deduct an ongoing adviser fee from customers’ accounts after those customers requested to remove their financial advisers from their accounts.
Asgard was also found to have breached its obligation to do all things necessary to ensure the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and contravened the Corporations Act.
In his decision, Justice Wheelahan observed that “Financial services providers in the position of the defendants should not be able to take the benefits which arise from automated and offshore processes and systems, which it may be inferred contribute to substantial profits, without also undertaking the burden of ensuring that those systems work, and that they promptly identify occasions where they do not.
“An appropriate penalty should have the effect of deterring the defendants, and financial services providers generally, from maintaining defective systems, and conversely, providing an incentive to establish and maintain systems that are reliable.”
However, the court acknowledged the preparedness of BT and Asgard to make early admissions of liability and took this into account in determining penalty.
Westpac would pay the penalties and the costs awarded against BT and Asgard.
Both BT and Asgard’s conduct were the subject of a case study by the Royal Commission which found that between 2001 and August 2017, the entities charged around 767 member fees for financial product advice that was not provided.
Between December 2017 and March 2018, Westpac remediated $634,490 to the members.