ASIC sues OnePath over fees for no service misconduct
ASIC has commenced Federal Court action against superannuation trustee OnePath Custodians for allegedly charging fees for no service and making false and misleading representations to fund members.
ASIC alleges OnePath incorrectly charged over $4 million in fees to more than 18,000 fund members when it was not entitled to do so.
“Superannuation is important for the future financial security of Australians. Consumers must be able to trust they are being charged fees correctly by their superannuation providers. ASIC’s case alleges that OnePath failed to do so in this case,” ASIC deputy chair Sarah Court said.
ASIC alleges that from 15 December 2015, OnePath charged financial advice service fees totalling $3,787,966.21 to 16,210 members who had been de-linked from their employer-sponsored superannuation plans.
OnePath sent these members letters and annual statements until about May 2020, which failed to inform them of their rights regarding adviser service fees, including their right to terminate the fees.
The regulator further alleges that from December 2015 until about January 2019, OnePath incorrectly charged financial adviser service fees totalling $502,667.18 to 2,508 members who did not have a linked plan adviser.
“ASIC also alleges that OnePath sent annual statements to these members until about October 2019 representing it was entitled to deduct adviser service fees from their accounts and that they were obliged to pay,” ASIC stated,
“ASIC claims that OnePath made false and misleading representations about its right to continue charging fees to these members, engaged in misleading or deceptive conduct and breached its obligations as a financial services licensee to provide services efficiently, honestly and fairly.”
ASIC is seeking declarations, pecuniary penalties and other orders from the Federal Court.
The date for the first case management hearing is yet to be scheduled by the court.
OnePath is the superannuation trustee of the OnePath MasterFund, through which it offers the Integra superannuation product. Employers established plans through the Integra product to provide their employees with superannuation. The employees became members of the OnePath MasterFund. As part of the Integra product, employers could appoint financial advisers to provide advice to employee members in exchange for a fee.
OnePath was a subsidiary of ANZ Limited until 31 January 2020, when it was sold to IOOF Holdings (IOOF), now known as Insignia Financial Limited. It has 847,896 superannuation member accounts and $35.1 billion in assets.
ASIC has prioritised enforcement investigations and remediation for consumers arising out of fees for no service conduct, which, as of 30 June 2021, had seen some of Australia’s largest banking and financial services institutions pay, or offer to pay, over $1.6 billion in compensation.
OnePath has advised that as of September 2021, ANZ and OnePath have paid more than $32 million in remediation for loss from mischarged adviser service fees. OnePath’s remediation program is substantially complete.
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.