Further ASIC action likely on NAB entities

The Australian Securities and Investments Commission (ASIC) has signalled it is not finished with National Australia Bank (NAB) and its entities with respect fee for no service and personal advice services.

At the same time as announcing it was initiating Federal Court action against NAB’s wealth and superannuation business in the form of NULIS Nominees and MLC Nominees, the regulator said it had an ongoing investigation in relation to Adviser Services charged by NAB entities in relation to personal advice services.

Further, it said the commencement of the Federal Court civil action was part of “broad-ranging and significant investigations currently underway into fee for no service failures in the financial advice industry”.

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Many of the issues which have given rise to the ASIC action against the NAB entities were traversed during the most recent hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The specific charges being levelled against MLC Nominees and NULIS are that they:

  • contravened s912A(1)(a) of the Corporations Act 2001(Corporations Act) by failing to ensure that its financial services were provided efficiently, honestly and fairly when it deducted approximately $33m Plan Service Fees from 220,000 No-Adviser Members;
  • made false or misleading representations to No-Adviser Members in contravention of ss 12DB, 12DA of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and s1041H of the Corporations Act by representing that it was entitled to deduct the Plan Service Fee and the No-Adviser Member was obliged to pay it when there was no such obligation;
  • contravened s912A(1)(a) of the Corporations Act when deducting approximately $67.1m Plan Service Fees from 300,000 members of MLC MasterKey Personal Super (Linked Members) in circumstances where it did not oblige Plan Advisers to provide services and members did not receive services;
  • made false or misleading representations in contravention of s12DB and s12DA of the ASIC Act by not disclosing that Linked Members in MLC Masterkey Personal Super had the right to turn off the Plan Service Fee; and
  • contravened s912A(1)(c) of the Corporations Act by failing to comply with financial services laws, including issuing defective disclosure documents within the meaning of s1022A of the Corporations Act and failing to exercise the degree of skill, care and diligence as a prudent trustee would exercise and failing to act in the best interests of members in breach of its general law duties and the Superannuation Industry (Supervision) Act 1993 when making the fee deductions and alleged misrepresentations to members.

 




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