Aware Financial Services Australia (Aware FS) is the latest financial services firm to be hit with a fine for charging customers fees for financial services it did not provide, with the Federal Court ordering it to pay a $20 million penalty.
The company, formerly called State Super Financial Services Australia (StatePlus), was found to have charged more than 25,000 customers fees for no service, in contravention of the ASIC Act.
“Aware FS charged fees to tens of thousands of customers for financial services it had grounds to believe it would not be able to provide. As a result, over $50 million in fees was charged to customers who have nothing to show for it,” Australian Securities and Investment Commission (ASIC) deputy chair Sarah Court said.
“Firms are responsible for ensuring they only charge consumers for services they provide. If they fail in this obligation, they face significant penalties.”
The fine is the result of Aware FS charging approximately 25,300 customers a total of $50 million in fees for advice services included as part of a superannuation product it offered between 21 August 2014 and 30 June 2018.
The firm provided at least 17,500 customers with written disclosure documents advising them that they would receive an annual financial planning review called an ‘Annual Review Service’.
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Another 7,800 customers entered into ongoing advice service arrangements that included the provision of an ‘Annual Review Service’, but Aware FS was found to have not provided the promised services.
The Court found that by charging fees for no service and failing to have internal procedures, measures, and controls in place to monitor compliance, it breached its obligations as an Australian financial services license holder.
In addition to the penalty, the Court ordered Aware FS to publish an adverse publicity notice on its website for one year.
Aware FS admitted liability and joined ASIC in submitting to the Court that a penalty of $20 million was appropriate.
The firm has remediated approximately $105 million in fees, interest, and lost earnings to customers who did not receive and did not decline their annual review entitlements.
Former ANZ subsidiary OnePath, banking giant Westpac (ASX: WBC), and subsidiaries of AMP Limited (ASX: AMP) are all currently in ASIC’s firing line over fees for no service allegations. Source: Business News Australia