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Wealth giants hit with $3m penalty for fees for no service

  • July 26 2021
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Wealth giants hit with $3m penalty for fees for no service

By Cameron Micallef
July 26 2021

The Federal Court has issued Westpac subsidiaries, BT and Asgard, $3 million in penalties for charging fees for no service and making misleading statements to consumers.

Wealth giants hit with penalty

Wealth giants hit with $3m penalty for fees for no service

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  • July 26 2021
  • Share

The Federal Court has issued Westpac subsidiaries, BT and Asgard, $3 million in penalties for charging fees for no service and making misleading statements to consumers.

Wealth giants hit with penalty

The Federal Court found that between September 2014 and August 2017, a total of 404 customers were harmed by BT’s and Asgard’s conduct, which involved charging fees for no service and making misleading statements.

“Misleading statements were made to customers, who were also charged for services they did not receive,” ASIC deputy chair Sarah Court said in a statement on Monday.

“The licensed financial services industry has an obligation to ensure that their systems and processes are reliable, accurate and their customers must be able to have trust in them.”

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The court found that the companies engaged in several acts of harmful conduct including “making false or misleading representations” to customers in account statements that no deductions of ongoing adviser fees were being charged after they requested to remove their financial advisers from their accounts.

Moreover, the pair were found to have engaged in “misleading or deceptive conduct” by providing customers with account statements which did not show that BT and Asgard were continuing to deduct an ongoing adviser fee.

The court also found Asgard breached “its obligation to do all things necessary to ensure the financial services covered by its financial services licence were provided efficiently, honestly and fairly”.

Justice Wheelahan said in his decision: “Financial services providers in the position of the defendants should not be able to take the benefits which arise from automated and offshore processes and systems, which, it may be inferred, contribute to substantial profits, without also undertaking the burden of ensuring that those systems work, and that they promptly identify occasions where they do not.

“An appropriate penalty should have the effect of deterring the defendants, and financial services providers generally, from maintaining defective systems, and conversely, providing an incentive to establish and maintain systems that are reliable.”

The court highlighted the preparedness of BT and Asgard to make early admissions of liability and took this into account in determining the penalty.

Westpac has indicated that it will pay the penalties and costs against BT and Asgard.

Wealth giants hit with $3m penalty for fees for no service
Wealth giants hit with penalty
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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