The Federal Court has ordered BT Funds Management to pay a $20 million penalty for incorrectly charging commission payments to members of one of its superannuation funds.
The court found that BT Funds, a subsidiary of Westpac, had charged super members insurance premiums that included commission payments even though these commissions were banned under the Future of Financial Advice reforms in 2013.
ASIC said that BT Funds continued to charge the commissions up until 2020.
Additionally, members of the ASGARD Independence Plan Division Two fund were also charged commissions via their premiums that were paid to financial advisers despite these members electing to have the financial adviser component removed from their account.
“Over 9,000 ASGARD Fund members were incorrectly charged commission payments totalling more than $9 million. This misconduct was caused by the failure to implement proper systems to ensure consumers are correctly charged,” said ASIC deputy chair Sarah Court.
The matter is one of six civil penalty proceedings ASIC filed against Westpac in November last year and the first matter to receive judgement.
“As the Court finalises these matters against Westpac, we urge Westpac, and other financial institutions, to look at their culture of compliance and invest in systems that mean incorrect charging of fees, premiums and commissions does not occur,” said Ms Court.
BT Funds was also found to have misrepresented to members in their periodic statements that proper deductions had been made, even though commissions were not permitted.
Westpac has indicated it will pay more than $9.8 million in remediation to over 9,900 members by July this year.
In handing down judgement, Justice Beach said that the misconduct was a result of systems and processing errors, and an inadequate risk management framework.
He also stated that the inappropriate deduction of amounts based on false or misleading conduct eroded the superannuation balances of affected members.
Last week we saw an adviser banned by ASIC for 10 years for fraud. ASIC said he lacks the honesty and integrity to participate in the financial services and credit industries.
Which of the executives from BT that was responsible for this blatant fraud will be banned from being involved in the financial services industry?
Will there be consequences for the management of BT?
So where does the $20M go? Into Consolidated Revenue, or into meeting ASIC regulatory costs?
Give advisers a break from paying regulatory levies when advisers are not the culprits. And what’s more, on the whole, never have been.