According to an ASIC statement, released this morning, the Federal Court of Australia has made declarations and ordered Superannuation Warehouse Australia Pty Ltd (SWA) to pay a penalty of $25,000 for false and misleading “free SMSF setup” advertising.
The firm, which provides online accounting and administration services for SMSFs, admitted that the statements were false and misleading, ASIC said.
It 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.
In fact, SWA’s online application form for the free SMSF set-up service could not be submitted without SWA being authorised to be the fund administrator – for which there was a fixed monthly fee.
Further, 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.
These matters were not clearly or prominently disclosed on the websites, ASIC stated.
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 his judgment, 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.
“Deciding to establish a self-managed superannuation fund is a significant financial decision,” said ASIC deputy chair Peter Kell.
“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,” said Mr Kell.