The Australian Securities and Investments Commission (ASIC) said ANZ and CBA had both distributed superannuation products through bank branches following fact-finding processes about clients’ financial arrangements.
However, ASIC said there were concerns that staff offering the products were authorised to provide general, but not personal advice.
Clients were offered either the Essential Super Product at CBA or the Smart Choice Super product at ANZ following their respective “Financial Health Check” and “A-Z Review”.
ASIC noted that CBA suspended the distribution of Essential Super in CBA branches in October last year.
“ASIC was concerned that the proximity between the fact-finding process and the discussion about Essential Super or Smart Choice Super was leading CBA staff and ANZ staff to provide personal advice to customers about their superannuation. Branch staff for both CBA and ANZ were only authorised to provide general advice,” ASIC said.
“Stricter consumer protection laws apply to financial services licensees when their representatives give personal advice about complex financial products such as superannuation than when they provide general advice about those products.
“This includes the requirement, with personal advice, to give a customer a statement of advice and to act in the customer’s best interests. People who give personal advice about complex products are also required to meet higher training standards.”
ASIC said the decision to offer the products immediately following the fact-finding processes could lead customers to believe the branch staff had considered the risks specific to the customer.
As a result of the court enforceable undertakings, CBA and ANZ will no longer be able to distribute their respective Essential Super and Smart Choice Super products in conjunction with their fact-finding processes.
The two banks will also each make $1.25 million community benefit payments.
According to the regulator, the court enforceable undertakings highlight the duty of financial services licensees to ensuring their clients actually understand the advice, and the nature of the advice, they are given about superannuation.
Deputy chair Peter Kell said, “ASIC will continue to proactively monitor how complex financial products such as superannuation are sold.”