The Federal Court has imposed the country’s first penalty for breach of the FOFA best interests duty on Melbourne-based firm NSG Services, according to ASIC deputy chair Peter Kell.
Speaking before the parliamentary joint committee on corporations and financial services today, Mr Kell said the Federal Court had imposed a civil penalty of $1 million on NSG only a “few hours” prior, marking the first time the court has issued a penalty for a breach of the best interests duty.
“[NSG’s] clients were commonly sold insurance and advised to roll over super accounts that committed them to costly, unsuitable and unnecessary financial arrangements,” Mr Kell said.
“The judge has remarked that he found the contraventions ‘very serious’.”
ASIC senior executive leader for financial services enforcement Tim Mullaly said the regulator expected NGS to be able to pay the fine.
“We’ve discussed with them the potential of paying that by term over a period of time to ensure that we are able to collect on that penalty … I don’t think there’s a written judgement as yet,” he said.
Mr Kell added "the judgement will be very interesting reading".
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