Tower gives undertaking to ASIC
Tower Australiahas given an undertaking to theAustralian Securities and Investments Commission(ASIC) in relation to repaying some investors in its FAI Personal Superannuation Plan (PSP) for underpayment on their investments.
It is also understood the group will announce a record full-year loss on Wednesday, partly due to writing down the value of assets in the group by $169 million, including a $120 million amortisation of excess market value earlier in the year.
As for the undertaking to ASIC, it follows an internal review stemming from Tower meeting with the regulator back in July after revealing it had underpaid around 1,000 of its superannuation policy holders while overpaying some 3,000 others between 1993 and 2001.
In July, as part of an enforceable undertaking, which followed consent orders from the Federal Court of Australia, Tower was required to conduct an internal review of a number of its financial products, including PSP.
Tower has also undertaken to repay any shortfall, plus interest, to both those investors who have fully or partially redeemed their investments in the PSP product.
The group says it will not require those customers who mistakenly received thousands of dollars in overpayments to return the money, and according to Tower chief executive Jim Minto the ratio of those overpaid to underpaid was three to one.
“Even if they are still clients, we will not be recovering the money because we feel it's been overpaid for a long time and it was through no fault of theirs - it was our fault,” Minto said earlier in the year.
Tower estimates that the cost of repaying policyholders is about $4.9 million, comprising $2 million to repay investors who have redeemed their investments, and $2.9 million to adjust the accounts of existing investors.
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