Registrable superannuation entity (RSE) licensee, Avanteos Investments Limited has pleaded guilty to 18 criminal charges relating to failures to update defective disclosure statements and continuing to charge fees to deceased superannuation members.
In early 2016, while it was a subsidiary of the Commonwealth Bank of Australia, Avanteos received legal advice that it did not have authority to deduct fees from super members after their death. ASIC said despite this, Avanteos did not update its disclosure statements and continued deducting these fees until May 2018.
During the period 6 January, 2016, to 1 May, 2018, disclosure statements for 18 super products issued by Avanteos were defective, as they failed to tell super fund members they would be charged adviser service fees after their death.
As a result of the offending, 499 deceased members with funds in these super products were charged almost $700,000 in fees by Avanteos when it was not entitled to do so.
Avanteos’s conduct was the subject of evidence given at the Hayne Royal Commission because of fees for no service.
Avanteos was imposed with additional licence conditions by the Australian Prudential Regulation Authority (APRA) in December 2019 and it had since remediated all affected customers.
This matter was the first criminal prosecution under s1021J(1) of the Corporations Act as it was an offence for the preparer of a disclosure document or statement to not take reasonable steps to ensure that a defective disclosure document was not distributed or is not accompanied by information that corrects the deficiency.
The 18 charges were filed today in the County Court, Melbourne, and the matter was next listed for sentencing on 1 June, 2022.
The matter was being prosecuted by the Commonwealth Director of Public Prosecutions (CDPP) after an investigation and referral by ASIC.
The maximum penalty for each offence, which occurred between 2016 and 2018 was $180,000.