Retirement
Financial services giant taken to court over fees for no service
The corporate watchdog has commenced Federal Court action against one of Australia’s largest financial services companies over alleged charging of fees for no service and “misleading” conduct.
Financial services giant taken to court over fees for no service
The corporate watchdog has commenced Federal Court action against one of Australia’s largest financial services companies over alleged charging of fees for no service and “misleading” conduct.
The Australian Securities and Investments Commission (ASIC) alleged on Thursday that NAB’s wealth management divisions, NULIS Nominees and MLC Nominees “misled members” of MLC’s MasterKey superannuation products and received around $100 million in fees charged for no service.
ASIC alleges that NULIS and MLC Nominees received $33 million in Plan Service Fees from 220,000 members with MLC MasterKey Business and Personal Super plans, who did not have plan advisers.
According to ASIC, NAB also received $67 million in advice fees from 300,000 MLC MasterKey Personal Super members who did not receive advice, due to their no-adviser status.
These allegations follow a marathon questioning of NAB and NULIS executives at the the royal commission’s public hearings on superannuation in August. These hearings uncovered similar concerns, although NAB last week argued that consumers were its top concern.
The company also said findings that it had failed to act in its members best interests were unfounded, given the best interests duty in question is not actually an “obligation at large” to act in members’ best interests generally.
Commenting on the proceedings, ASIC said, “The commencement of this civil penalty action is part of ASIC’s broad-ranging and significant investigations currently underway into fee for no service failures in the financial services industry.
“Alongside these investigations ASIC is obtaining considerable remediation for impacted customers, currently estimated to exceed $850 million.”
ASIC alleged that MLC Nominees and NULIS;
- Breached the Corporations Act 2001 by “failing to ensure that its financial services were provided efficiently, honestly and fairly when it deducted approximately $33 million Plan Service Fees from 220,000 no-adviser members;”
- Made “false or misleading” representations to no-adviser members, and broke the Corporations Act again by suggesting that it was entitled to those fees;
- Contravened the Corporations Act by charging $67.1 million Plan Service Fees from the 300,000 MLC MasterKey Personal Super members without requiring plan advisers provide advice;
- Made more “false and misleading” representations to members by not making clear that they had the right to turn off the Plan Service Fee;
- Failed to obey financial services laws by issuing “defective disclosure documents” and “failing to exercise the degree of skill, care and diligence” required, and failing members’ best interests. As such, MLC Nominees and NULIS were in breach of the Corporations Act again.
ASIC is seeking a civil penalty and declarations of contravention against NAB from the Federal Court.
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