BT and Asgard to pay penalties for fee-for-no-service

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.
Related News:

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.




Recommended for you

Author

Comments

Comments

C'mon Timmy Wilson - ask these companies some questions, mate. No? Why? Are they the "good" guys?

No, they are not the good guys. Nor are union super funds, which have their own set of dubious practices which are just as bad if not worse.

However while the regulators take action against the likes of BT, they turn a blind eye to union funds. Wilson's focus on union funds is just trying to fill the gap left by regulators' dereliction of duty.

Yeah, like this never ever happens with union super right? At leats BT & Asgard are admitting and paying, ever know a union super (or for that matter, a labor pollie) to admit an error or make remediation? Especially around 'false & misleading statements' and paying a service/advice fee without receiving any service!!!!

Hilarious you want to defend these union & labor rogers by throwing sh*t at others.

Preparedness to make early admission of liability seems to hide that fact that this was deception in the highest order. The fish rots from the head, and who owns BT and Asgard? We know who. The question is whether the people allowing this or even instructing for this to happen are still with the bank. I doubt it very much.

And any Adviser that did such FFNS theft would be banned.
But no it's fine for Institutions to act criminally and just pay a fine.
BT will pay costs but as anyone with any legal knowledge knows ASIC will still be up for significant legal costs and significant time running this case. Of which ASIC will BILL ADVISERS.
And the $4.5 Mill in fines will jump straight into consolidated revenue.
This Adviser Levy double taxation system is pure Govt / Frydenberg & ASIC theft !!!!!!!!!!

Act criminally? According to the article, they have been done for deducting Adviser Fees. Not their own admin or management fees. They will rightly wear the cost of remediating the account holders but I doubt they will be able to claw those fees back from the Advisers they paid them to.

What they did was deduct advice fees after the clients asked they be stopped. These fees were not passed on to advisers as there was no longer an adviser attached to the account. The fee continued to be deducted but hidden under other costs and passed into general revenue with the bank owner. I don't see where the adviser comes in on this, unless I'm misunderstanding the core concept.

The article doesn't say they pocketed the Adviser fee money in this specific incident. It refers to defective systems and off-shore processing. If they did take it, I 100% agree with you.

It hurts your head just to think about it, but sadly I'm correct even though I really wish I wasn't: "In relation to superannuation products for which it is trustee, BT issued account statements which appeared to show that adviser fees were no longer being charged while the adviser fee’ line item was removed from the account statement, an amount equal to that fee was added to the administration fee amount" from https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-rel...

Thanks for the link. Yes, it says that Asgard retained the wrongly charged Advice Fees as their own revenue. That is insane. They are a platform. How could they ever think they were entitled to it?

It is insane and criminal. I stole money and lied to the victims but I was caught and admitted it and gave it back. I don't think this is how the law is supposed to work.

Yep criminally, these institutions knew for years they were charging clients fees for no service.
And the institutional managers happily let it continue.
ASIC knew it was happening too and asked Bank institutions to stop it, they didn’t and ASIC were too pathetic to enforce it until the RC shown the light on how pathetic ASIC were at regulating the banks and how happily the banks were willing to keep charging adviser fees to client either with no service or no adviser. Yep mate that is criminal all round.

Great....what about AMP, they lied to the regulator multiple times and are only sorry they got busted

Add new comment