BT and Asgard’s conduct in making misleading representations to customers that adviser fees were no longer being charged, when those fees continued to be deducted from customers’ accounts.
On 23 July 2021 Justice Wheelahan of the Federal Court of Australia (in proceeding VID 552 of 2020) ordered BT Funds Management Limited (BT) and Asgard Capital Management Limited (Asgard) to pay pecuniary penalties of $1.5M each to the Commonwealth for conduct in relation to five affected products (Asgard Infinity eWRAP Pension Account, Asgard Infinity eWRAP Super Account, Asgard Rollover Service, Asgard Superannuation Account and Asgard Employee Superannuation Account) between September 2014 and August 2017.
The court ordered BT and Asgard each to pay a pecuniary penalty because they were found to have, on at least 487 occasions, between September 2014 and August 2017:
(a) made false or misleading representations to customers in customer account statements to the effect that no deductions of ongoing adviser fees were being made from customers’ accounts after those customers requested to remove their financial advisers from their accounts; and
(b) 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 from customers’ accounts after those customers requested to remove their financial advisers from their accounts.
The court also made declarations that 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, because Asgard:
(a) put in place ineffective processes and systems to cease charging adviser fees, in that the administrative steps to do so were processed by a third-party provider which did not have access to necessary systems;
(b) erroneously applied a coding change, which caused ongoing adviser fees to continue to be included in accounts but under the description of administration or account management fees, thereby making it difficult for the overcharging to be identified;
(c) had ineffective controls in place to check that ongoing adviser fees were not being charged following a request to remove an adviser from an account, in that controls only reviewed a sample of customers each month and the form of the review did not pick up the errors;
(d) retained until no later than December 2017 ongoing adviser fees to which it was not entitled;
(e) provided account information conveying that the ongoing adviser fees were no longer being charged, when in fact amounts for those fees were being deducted from customer accounts.
The court found that, between September 2014 and August 2017, a total of 404 customers who had a total of 408 accounts were harmed by BT’s and Asgard’s conduct on 487 occasions, in circumstances where Asgard benefited from a total of $130,006 (including interest) in incorrectly charged fees.
Between 2001 to 1 July 2014, a total of 363 customers were harmed by BT’s and Asgard’s conduct. BT and Asgard benefited from a total of approximately $500,000 (including interest) in incorrectly charged fees.
Between December 2017 and March 2018 BT and Asgard conducted a remediation program which refunded the inappropriately charged fees referred to above. Those costs were met by the Westpac Group. Westpac Group will pay the penalties and costs awarded against BT and Asgard.