The Federal Court has ordered Westpac-owned BT Funds Management to pay a $20 million penalty for incorrectly charging superannuation members insurance premiums that included commission payments.
Such commissions are banned under Future of Financial Advice reforms introduced in 2013 but BT Funds continued to take commissions from its Asgard Independence Plan Division Two members until 2020.
The members were also charged commissions via their premiums that were paid to financial advisers, even though they had elected to have the financial adviser component removed from their account.
The Federal Court order issued on Friday arose from actions taken by the Australian Securities and Investments Commission (ASIC) against Westpac. It is one of six civil penalty proceedings ASIC filed against the bank in November last year.
“Over 9000 Asgard Fund members were incorrectly charged commission payments totaling more than $9 million,” ASIC Deputy Chairman Sarah Court said.
“This misconduct was caused by the failure to implement proper systems to ensure consumers are correctly charged.”
ASIC says the “insurance in super” case against the Westpac subsidiary is the first matter to receive judgment.
The regulator says Westpac has indicated it will pay over $9.8 million in remediation to more than 9900 members by July.
“As the Court finalizes these matters against Westpac, we urge Westpac, and other financial institutions, to look at their culture of compliance and invest in systems that mean incorrect charging of fees, premiums and commissions does not occur,” Ms Court said.
A spokesman for Westpac says the business reached agreement with ASIC last November to resolve six separate longstanding matters through “agreed” civil penalty proceedings filed in the Federal Court.
“Westpac and ASIC jointly submitted agreed proposed penalties for each of the proceedings, totaling $113 million,” the spokesman said.
“These penalties remain subject to court approval and have been substantially provisioned (together with anticipated legal costs) in Westpac’s Full Year 2021 results.”
The spokesman says the matters are being heard separately this month.
“Westpac apologises to all affected customers and the vast majority of remediation is now complete,” the spokesman said.