Major banks get $1.2m bill over unauthorised super advice
ASIC has accepted court enforceable undertakings from CBA and ANZ after an ASIC investigation identified concerns with the distribution of their superannuation products.
The Commonwealth Bank of Australia and Australia and New Zealand Banking Group have agreed to change the way they distribute superannuation products to their customers under court enforceable undertaking.
In a public statement, ASIC said it investigated CBA's distribution of its Essential Super product and ANZ’s distribution of its Smart Choice Super and Pension product, Smart Choice Super, through bank branches.
ASIC said it found a common practice of offering those products to customers at the conclusion of a fact-finding process about customers’ overall banking arrangements.
“CBA's fact-finding process was called a 'Financial Health Check'. CBA staff also sometimes helped customers roll over their other superannuation into the Essential Super account at the time of distribution. ANZ’s fact-finding process was called an A-Z review,” ASIC stated.
The corporate regulator said it was concerned that proximity between the fact-finding process and the discussion about Essential Super or Smart Choice Super was leading “CBA staff and ANZ staff to provide personal advice to customers about their superannuation”.
“Branch staff for both CBA and ANZ were only authorised to provide general advice.”
ASIC highlighted that stricter consumer protection laws apply to financial services licensees when their representatives give personal advice about complex financial products such as superannuation than when they provide general advice about those products.
“This includes the requirement, with personal advice, to give a customer a statement of advice and to act in the customer’s best interests. People who give personal advice about complex products are also required to meet higher training standards,” ASIC said.
ASIC said it was concerned that customers may have thought, due to the proximity of the fact-finding process to the offer of Essential Super or Smart Choice Super, that the CBA branch staff or the ANZ branch staff were considering risks specific to the customer when this was not the case.
“These court enforceable undertakings prevent CBA from distributing Essential Super in conjunction with a Financial Health Check and ANZ from distributing Smart Choice Super in conjunction with an A-Z Review,” the corporate regulator said.
“They also require CBA and ANZ to each make a $1.25 million community benefit payment. If there is a breach of the undertaking ASIC can, under the ASIC Act, apply for orders from the court to enforce compliance.”
CBA chose to suspend the distribution of Essential Super in CBA branches in October 2017.
ASIC deputy chair Peter Kell said ASIC will “continue to proactively monitor how complex financial products such as superannuation are sold”.
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 has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.