ASIC has confirmed civil penalty proceedings in the Federal Court against Mercer Financial Advice for allegedly making false or misleading representations to its customers about fees charged and services that were not provided, and for failing to provide fee disclosure statements.
According to the corporate regulator’s deputy chair “these proceedings are another example of a large financial institution charging fees to customers that we allege it was not entitled to charge, being for financial services and advice those customers did not receive.”
“Additionally, Mercer’s poor compliance systems led to allegedly misleading disclosure statements, which affect how customers make decisions about the financial services they are paying for,” Sarah Court said.
The corporate regulator has alleged that between July 2016 and June 2019, Mercer made false or misleading representations on more than 5,500 occasions by, among other things, claiming it had provided all of the services it was required to provide, when it had not.
Specifically, ASIC said, Mercer failed to provide review meetings to its customers, which were formal meetings with a financial adviser to track a customer’s progress against their financial plan and to review their financial position.
Moreover, ASIC alleged that Mercer incorrectly informed customers they were obliged to pay certain fees and that they had a binding contract with the firm when that was not the case.
The corporate regulator further alleged that Mercer failed to provide fee disclosure statements, or provided inaccurate statements, to more than 2,100 customers and failed to do all things necessary to ensure the financial services covered by its licence are provided efficiently, honestly and fairly.
Mercer had previously completed a remediation program for more than 3,400 customers who were charged fees for financial advice that may not have been provided between January 2012 to June 2019, resulting in compensation of approximately $45 million.
This time around, the corporate regulator is seeking declarations of contraventions and pecuniary penalties from the Court, as well as an order that Mercer be required to disclose its contraventions to the public.
ASIC please read this! Your double standards are for all of the Advice Industry to see – again and again and again AFSL’s and their advisers – both small and large are being held to account for ASIC’s version of what client’s should get for an ongoing fee, and importantly, they are applying their current rules and versions to advice and fees charged dating back to 2005 – we are still waiting for a mandated template of exactly what that is in the legislation. ASIC if you are reading this – how about targeting all of the accountants for once, that provide non-licensed and unauthorised advice and charge fees and fly under the under as they are not on any financial adviser register. When was the last time an accountant was taken to court and face jail time and civil penalties for providing unauthorised advice??? I have lost count of the number of times in the last year that I have witnessed accountants blatantly charging fees for advice whilst not being authorised – I mean C’mon ASIC get real and do your job across all financial services, not just the advice space.
Two really important things here:
1. If a small practice did this they would be gone. I am not saying Mercer should go, but don’t just close down those that are too small to fight it.
2. ASIC has no idea what clients should get for their annual fee. It appears they think it is all about having a meeting to track the progress against their financial plan and to review their financial position. What ASIC don’t understand is it is much more than this. Most people can track their investments themselves. The real value, and something that ASIC don’t understand is having an adviser gives them someone to talk to that will stop them making silly mistakes, or make best use of changes in legislation, or just give them the peace of mind that everything is ok. These can be soothing phone calls, or emails reminding them to stay the course in volatile markets……..
Funny this isn’t it if an adviser did this there banned from the industry i doubt mercer will be.
So they’ll be hit with a large fine and allowed to continue business afterwards as normal. Meanwhile an Adviser can forget to dot an “I” or cross a “T” and they lose their licensing, career & reputation for life? Seems fair as always ASIC.
Must be bonus time at ASIC
‘as well as an order that Mercer be required to disclose its contraventions to the public’….seriously? Are we back in medieval times where people are paraded through the streets? They have already refunded $45million to clients for alleged breaches dating back 10 years. I am tipping 99% of these clients would have had no issue with Mercer but ASIC knows better and is offended on their behalf. Nothing is ever enough for them. It is ASIC’s conduct that should be investigated. They are out of control, power drunk bullies.
You should know better than to show any ounce of compassion when it comes to an insto on this forum. Fact is that the disclosure regime is way too onerous and complicated and can catch anyone out – large or small.
ASIC have complete power and complete power corrupts so yes we are back to medieval times. Realistically the key is whether a review was actually completed or if it was completed in accordance with what ASIC believes should be a review. The requirement to “have formal meetings with a financial adviser to track a customer’s progress against their financial plan and to review their financial position” is why the minimum ongoing fee is now over $3,000 for most clients and the profitable one’s are at $5,000. Most clients do not need a formal ROA each year with the side effect of charging $5k per annum being that changes which aren’t needed are being made in order to justify the obscene fee’s which need to be charged due to ASIC’s incompetence. There has to be a middle ground.
You need to look at the value you’re adding because most clients do need and benefit from a review each year and there is overwhelming Academic and private sector evidence to support that. I’m not prepared to fix the car and say come back when it runs out of oil and you’re on the side of the road. If you’re not wanting to do that then just charged a fixed fee and don’t provide product advice.
No Fee for No Service at Industry Super – no requirement to provide a service under Intra Fund Advice I am told – could be wrong – but Financial Planners have more Red Tape – but don’t product providers have the conflicts now?
we have to get away from feeling entitled about receiving an ongoing fee with out advice. yes there is much more we do, and that should be counted, but with out advice it rightly means nothing.