Aware Financial Services Australia fined $20 million for charging fees for no service

Aware Financial Services Australia Limited, formerly State Super Financial Services Australia Limited, has been ordered by the Federal Court to pay a $20 million penalty for charging over 25,000 customers fees for financial services it did not provide. 

Aware FS’s conduct had been the subject of a case study as part of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

Australian Securities and Investments Commission (ASIC) deputy chair, Sarah Court, said: “Aware FS charged fees to tens of thousands of customers for financial services it had grounds to believe it would not be able to provide. As a result, over $50 million in fees was charged to customers who have nothing to show for it. 

“Financial services providers should treat the penalty imposed today as an important reminder to maintain robust internal controls and compliance systems. Firms are responsible for ensuring they only charge consumers for services they provide. If they fail in this obligation, they face significant penalties.” 

Between 21 August, 2014 and 30 June, 2018, Aware FS charged approximately 25,300 customers a total of $50 million in fees for advice services included as part of the superannuation product offered by Aware FS, which at that time was also a superannuation trustee. 

The court said the firm provided at least 17,500 customers with written disclosure documents advising them that they would receive an annual financial planning review called an Annual Review Service. 

Another 7,800 customers entered into ongoing advice service arrangements that included provision of an Annual Review Service. However, Aware FS did not provide the promised services. 

The court found that by charging fees for no service and failing to have internal procedures, measures and controls in place to monitor compliance, Aware FS also breached its obligations as an Australian Financial Services Licence (AFSL) holder to act efficiently, honestly and fairly and to comply with financial services laws. 

The court also ordered that Aware FS publish an adverse publicity notice on its website for one year. 

In handing down his decision, Justice Moshinsky concluded that Aware FS’s conduct was serious and systematic, with thousands of similar contraventions having occurred repeatedly over an extended period of time. 

Justice Moshinsky also highlighted the large number of Aware FS customers affected by this misconduct, noting that remediation of $105 million for this and related conduct has been paid.  

Aware FS admitted liability and joined ASIC in submitting to the court that a penalty of $20 million was appropriate. 

 




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Wasn't this a state government fund? So with 25,000 customers missing out and let's say 200 customers per salaried planner, that would be 125 full time employees. If I remember my studies correctly, fee for service must have an adviser attached to the fee according to the Corporations Act. I would love to know more about how this situation came to be. Reminds me of the VW and Bosch diesel saga.

Can we expect some creative accounting coming up? Wondering if AwareSuper planners will be told to invest clients monies "conservatively" and place more money in bonds this year...Corporate Bonds that is,... Bonds issued by AwareSuper designed to pay a $20 million speeding ticket. 12 months later instead of getting 2% on your bonds you only earned 1%. "Shucks 2022 is a bad year Mr Client but it's a long term investment." said the Planner. Similar to how they raised money to buy State Plus and then wrote that off as a loss.

Who pays the fine? Surely in a profit for members fund, there are no reserves to pay a fine of this magnitude, so therefore the burden will fall on the members of the fund. The executives get off scot free......

Who pays the fine? Bet it's Aware members in the end.

So these Industry Fund members get charged FFNS and then the same members get to pay a $20 million Fine.
Great job Industry Super.
How much is each Industry Fund charging for Intra Fund Advice / Sales ??
When the majority of Industry Fund members are getting NO Service for this Hidden Commission they are all paying.
How is such Hidden Commissions for NO Service allowed ???? What a disgusting ISA rort is Intra Fund Sales.

I'm not a fan of ISA either but Aware Super isn't an Industry fund and isn't part of ISA. This has also arisen from the StatePlus product which merged with Aware which also has nothing to do with ISA.

This also wasn't an intrafund advice issue, they charged a much higher fee in and said they would give members an annual review service that never happened.

It just makes you look dumb by throwing shade at ISA for a completely unrelated issue. Save the complaining for an article actually about ISA or intrafund advice.

Aware super Isn’t an Industry Fund ……ah ok Dumbo….open Aware Supers home page …..
We're a top performing* industry fund !!!!
So who’s the Dumby ??? Look in the mirror
And I never said this FFNS rort was Intra Fund Advice.
I said how much does Industry Super steal via Hidden Commissions that is for the majority of members a cost with no service.
Bye bye Dumby
Spit you Dumby elsewhere :-)

Aware super was running an aligned dealer group that did the same thing that most other dealer groups used to do but owned by a Super fund and run as a profit center. Just another mid tier dealer group with similar fees and similar practices just lower cost of client acquisition and those sweet sweet ongojng service fees paid out of superannuation fund accounts. Those were the days.

So now the precedence has been set, we should all expect them to follow up all the other ISA & union industry funds doing exactly this to their millions of members, imagine the dosh that would roll in then... ah, that's right, ASIC & APRA in their wisdom has allowed those funds to charge fees to members for such a war chest!

Amazing, ASIC can never ever actually do anything right, and probably on purpose.

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