SMSF set-up business penalised $25,000
Self-managed superannuation fund set-up business, Superannuation Warehouse Australia (SWA) has been penalised $25,000 for false and misleading advertising following Federal Court action initiated by the Australian Securities and Investments Commission (ASIC).
ASIC has issued a statement in which it said the penalty related to the company's "Free SMSF Setup" advertising on two of its websites.
The statement said SWA, which provides online accounting and administration services for SMSFs admitted the statements were false and misleading and had consented to the declarations and additional orders requiring SWA to:
- implement a compliance program;
- post notices on the websites about the proceeding; and
- notify consumers who applied to SWA for the free SMSF setup service about the proceeding.
The Federal Court found that between 22 January 2014 and 8 May 2015, the "Free SMSF Setup" statement on the websites was false, misleading and deceptive because it represented that SWA would set up an SMSF at no cost when in fact:
- SWA's online application form for the free SMSF set up service could not be submitted without authorising SWA to be the fund administrator for which there was a fixed monthly fee;
- SWA requested applicants to put in place a payment plan for monthly payments of administration fees when it set up the SMSF; and
- SWA charged monthly fees for its SMSF administration services.
The ASIC statement said these matters were not clearly or prominently disclosed on the websites.
It said that, in addition, between 22 January 2014 and 5 August 2014 applications for SMSF set up with a corporate trustee required a payment of $950 to be made to SWA, without this being clearly and as prominently stated on the websites where "Free SMSF Setup" was advertised.
In the judgment, His Honour Justice Beach found that the "Free SMSF Setup" representation was false or misleading in that:
- the administrator consent was required for the "Free SMSF Setup";
- the administrator consent affected the costs of the "Free SMSF Setup"; and
- monthly fees were required to be paid to SWA for its services.
In the circumstances the setup was not ‘free'."
ASIC deputy chairman, Peter Kell welcomed the decision and said "Deciding to establish a self-managed superannuation fund is a significant financial decision. Consumers should not be misled by advertising, including online. ASIC considers that terms such as "free" convey a strong impression to consumers and should not be used where there is any charge or cost associated with the product or service advertised."
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