ASIC acts against super fund on general advice

6 November 2019

The Australian Securities and Investments Commission (ASIC) has moved against a superannuation fund on the basis of it using a general advice model.

The regulator announced today it had initiated Federal Court action against MobiSuper Fund, which is a division of the Tidswell Master Superannuation Plan.

It said the action was against:

  • Tidswell Financial Services Ltd (Tidswell), an Australian financial services (AFS) licensee and superannuation trustee;
  • MobiSuper Pty Limited (Mobi), the promoter of the MobiSuper Fund;
  • Mobi’s AFS licensee ZIB Financial Pty Limited (ZIB); and
  • Andrew Richard Grover, a director of Mobi and ZIB.
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The announcement said ASIC was concerned about potential harm to consumers if professional superannuation trustees failed to adequately monitor the activities of their promoters.

“ASIC is concerned that Tidswell and ZIB failed to do all things necessary to ensure the financial services covered by their respective AFS licences were provided efficiently, honestly and fairly,” it said.

“ASIC also alleges that both Tidswell and ZIB failed to adequately monitor Mobi’s promotion of the Fund through a purported ‘general advice model’ that had insufficient regard for consumers’ best interests,” the ASIC announcement said. “Further, ASIC alleges false and misleading statements were made about superannuation, insurance products and services.”

ASIC claims that Mobi offered an obligation-free ‘lost super’ search to consumers through internet advertising campaigns with the primary objective to get consumers to join the Fund and roll their other super balances into Mobi-promoted products.

ASIC further alleges that, in marketing telephone calls to consumers, Mobi customer service officers (CSOs) made misleading claims about fee savings and equivalent insurance cover if consumers joined the Fund and provided personal advice that was not in consumers’ best interests.

ASIC is seeking civil penalties against:

  • Tidswell and ZIB for advice given to consumers by Mobi CSOs in breach of the best interest obligations;
  • Mobi and Mr Grover for the misleading internet advertising campaigns; and
  • Mobi for the false and misleading claims made by CSOs during marketing calls.

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Yet the union funds are free to continue making false claims in advertising, provide personal advice under the guise of general advice, offer frequent flyer points to join, use member funds to sponsor sporting teams and entertain union buddies at sporting events etc etc etc.

Ok, fair I take it then the Industry Super Funds will be the next ones in the line up for ASIC to take action against as many do the same thing?? Australian Super were the most recent, whereby they convinced one of my clients to rollover from his wrap super account into his employer fund to save on fees, in turn crystallising a $7500 capital gains tax liability that was deducted by the fund prior to rollover. Client was not advised of this and sheepishly came back for my help commenting that the "sales rep at Australian Super could have sold ice to the eskimos" Complaint has been lodged, but of course they cannot locate the phone recording of the conversation the call centre operator had with the clients and its being investigated. It would have taken client over 8 years to re-coup this triggered CGT liability with the purported fee saving in the new fund and that does not take into account that earnings on his wrap account over 5 years had been in fact higher than the Australian Super Balanced option he was going into.

I suggest that this one example alone would be sufficient for ASIC to launch an immediate investigation.
Let's see what transpires shall we ???
Either the Govt are not in control or ASIC are advising (instructing) Frydenberg to "not go there".
Either way, it is a blatant and obvious avoidance strategy by the regulator who have only recently appointed this very same super fund as the default fund for ASIC employees.
Is ASIC's preferred partner for flying, Qantas ?
Does Qantas have a contract with ASIC to provide transport services ?
Are ASIC going to fully investigate the very same super fund they have appointed as a recommended option for their own employees ?

How is this any different to enticing people to open account to gain frequent flyer points, and then actively contacting them to consolidate funds.

It's not.

This is good news for ethical financial advisers. The product providers game plan is to make advice too complicated and expensive to receive. They have further eliminated their competition by suggesting further adviser study will fix all the problems so less advisers (less personal advice) They also helped unprofitable advisers realise that they can't continue their business so shut them down.
Now the product providers will deliver FUM inflow to their own products under general advice, most probably via an algorithm that asks the right questions to deliver their product as a solution.
General advice doesn't have the requirement of a statement of advice or have a best interest duty. It will be like the good ol days where you were an agent and flogged your product. Well done.
This is why general advice must be outlawed.

Yet to see ASICk Joke open the lid on the can of worms called Industry Super Australia (aka ISA or Union Super) Is the word 'Ponzi' an adjective, verb or noun nowadays?

Check out Australian Super Website

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