The Federal Court has today ordered Westpac subsidiary and superannuation trustee, BT Funds Management Limited (BT Funds), pay a $20 million penalty for incorrectly charging commission payments to members of one of its superannuation funds.
The Court found BT Funds had charged superannuation members insurance premiums that included commission payments, despite the banning of these commissions under the Future of Financial Advice reforms in 2013. BT Funds continued to charge the commissions until 2020.
Asgard Independence Plan Division Two (Asgard Fund) members were also charged commissions via their premiums that were paid to financial advisers, even though the members had elected to have the financial adviser component removed from their account.
ASIC Deputy Chair Sarah Court said ‘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.’
The ‘insurance in super’ matter was one of six civil penalty proceedings ASIC filed against Westpac in November 2021 (21-320MR). This is the first matter to receive judgment.
‘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,’ concluded Ms Court.
The Court also found BT Funds misrepresented to members in their periodic statements that proper deductions had been made, even though commissions were not permitted.
In handing down judgment, Justice Beach remarked that the misconduct was a result of systems and processing errors, and an inadequate risk management framework. His Honour further stated that the inappropriate deduction of amounts based on false or misleading conduct eroded the superannuation balances of affected members.
Westpac has indicated it will pay over $9.8 million in remediation to over 9,900 members by July 2022.