Superannuation trustee penalised over insurance commissions in super
The Federal Court has ordered BT Funds Managements Limited to pay a $20 million penalty for incorrectly charging commission payments to members of one of its superannuation funds.
Late last week, the Federal Court found that BT Funds had charged superannuation members insurance premiums that included commission payments, despite the banning of these commissions under the Future of Financial Advice reforms in 2013. BT Funds continued to charge the commissions until 2020.
In a public statement issued by ASIC, the corporate regulator said Asgard Independence Plan Division Two (Asgard Fund) members were also charged commissions via their premiums that were paid to financial advisers, even though the members had elected to have the financial adviser component removed from their account.
The court found BT Funds contravened both the Corporations Act and the ASIC Act. Westpac had made admissions on the matter, and the parties had agreed on a statement of facts.
The Federal Court also found BT Funds misrepresented to members in their periodic statements that proper deductions had been made, even though commissions were not permitted.
In handing down judgment, Justice Beach remarked that the misconduct was a result of systems and processing errors and an inadequate risk management framework.
He further stated that the inappropriate deduction of amounts based on false or misleading conduct “eroded the superannuation balances of affected members”.
Westpac has indicated it will pay more than $9.8 million in remediation to over 9,900 members by July 2022.
ASIC deputy chair Sarah Court said that over 9,000 Asgard Fund members “were incorrectly charged commission payments totalling more than $9 million”.
“This misconduct was caused by the failure to implement proper systems to ensure consumers are correctly charged,” said Ms Court.
The “insurance in super” matter was one of six civil penalty proceedings ASIC filed against Westpac in November 2021. This is the first matter to receive judgment.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
