The corporate regulator has alleged that from 1 April 2013 to 30 June 2018, StatePlus charged at least 36,592 members fees for financial advice it promised to provide but did not. The conduct was said to include the promise of an annual financial planning review and the contact of members as part of the review.
At the time, StatePlus was the RSE licensee for the StatePlus Fixed Term Pension Plan and the StatePlus Retirement Fund, which both held more than $17 billion in funds under management and around 75,000 members as at 30 June 2017.
ASIC’s claim will argue the company issued defective disclosure documents or statements that included promises to provide advice to members in circumstances that StatePlus did not have reasonable grounds for believing it could provide.
ASIC also said it had failed to establish and maintain the appropriate internal procedures, measures and controls to ensure that it could provide or would be able to provide the promised annual advice.
Further, StatePlus has been accused of contravening its overarching obligations as an AFSL holder to act efficiently, honestly and fairly.
ASIC is seeking declarations and penalties from the Federal Court, with the maximum civil fine for the alleged contraventions being between $1.7 million and $2.1 million per breach.
StatePlus has remediated more than $100 million to members affected by the misconduct.
The company was a case study during the royal commission and ASIC’s proceedings against it is the third enforcement action it has taken for fees-for-no-service activity.
In 2018, ASIC commenced cases against NAB wealth entities NULIS Nominees and MLC Nominees for similar activity.
Similarly, in December 2019, ASIC commenced civil penalty proceedings against NAB for alleged contraventions of the ASIC Act and the Corporations Act for fees–for–no–service conduct. The case is yet to be scheduled for trial.
Who will pay any such fine? The members of course. ASIC you should be ashamed of yourself for acting so violently against the member interests that you should be defending.
Isn’t intrafund advice technically fees for no service because all super members pay it but they don’t all get a service, they need to start charging a fee to the individual who gets the advice not to everyone
As a former StatePlus adviser, I can attest that the culture was all about FUM as opposed to real genuine ongoing financial planning relationships. Large clients were maintained, (not really what you’d called looked after) but there was always another NSW Public service person retiring and that caused clients with reducing balances to go by the wayside. An endless supply of new clients was and is their problem. Get them in, get them into multi manager portfolios, charge them 0.85% and get them out the door. A culture set by Management. Their focus now is on once off advice fees, and moving away from ongoing advice. After all they’re making plenty of dollars on managing the money and they don’t have to worry about obtaining new clients and so it’s a very different service culture. Compare this to other advice firms with no connection to products, who will always struggle to get new clients, they value the client, care deeply, form deeper relationships and therefore appreciate the ones they have and don’t have these fee for no service issues. sadly they’ll pay the price too.
Well written Michelle
ASIC needs to cancel their licence ASAP otherwise they have double standards. They can close Dover due to misleading statements around Insurance protection but they can’t close down StatePlus for 1) charging 36,000 clients fees for no services and 2) and giving out defective Fee Disclosure statements.
Secondly Proud Partner of the FPA helping to shape the direction of advice in Australia. Well done FPA members. You should be proud of the company you’re holding.
That makes perfect sense old bob . The only thing that comes to mind is are state plus too big to fail?
HOLY SHIT!! WHAT ABOUT INDUSTRY SUPER FUNDS?
ASIC YOU PACK OF CORRUPT DOUCHEBAGS!
Isn’t it time for fund and advice executives to be held personally accountable for their advice business practices? The executive were the ones setting unserviceable targets for advisers in the first instance then walking away with golden parachutes when StatePlus was sold to First State. Just ask any adviser working at StatePlus during the period in question. When will executives be made to actually hold relevant qualifications and pass the FASEA exam before being allowed to operate advice businesses or be responsible managers?
YES! I wrote the holy shit comment above and I totally agree with you. Having worked in banking for many years I saw this all the time. Bank senior managers setting huge targets and then looking the other way while the “top performers” did anything they could to reach those targets.
APRA and ASIC should also be lifting their game and scrutinising the remuneration packages of these executives – there should be claw-back of their bonuses, better still no bonuses for these uneducated spivs who are the real ones culpable for the soured reputation of the advice industry. The FASEA code of ethics is very specific that the code only applies to individual advisers – how convenient! These execs still do as they please and get recycled from one institution to the next whether its industry funds or retail. What’s the point of RG246 and the Code of Ethics if it doesn’t apply to these executive leaches that drive bad practices.
about time
“StatePlus has been accused of contravening its overarching obligations as an AFSL holder to act efficiently, honestly and fairly”….If previous example of Dover doing this is anything go by then they should be shut down.
what about q super. they charged commissions paid to q invest (0.18% pa) and q invest did not provide a review.
Are you talking about QSuper’s administration fee? hahaha. not sure this went directly to QInvest Brucey boy.
Inside the MER
who is anyone going to trust anyone in the super industry..?
its pretty lame.
still waiting for intra funds advice fee for no service
Ummm…Industry funds….??
Ummm…check out the history of State Plus before calling them an industry fund.
State Plus, formley know as State Super Financial Services, acted like they where part of the State Super system. If it walks like a duck and quacks like a duck! They feed of this association to make them appear as if they where.