Avanteos Investments Limited (Avanteos) has pleaded guilty to 18 criminal charges relating to failures to update defective disclosure statements and continuing to charge fees to deceased superannuation members.
At the time of the offending, Avanteos was a subsidiary of the Commonwealth Bank of Australia.
In early 2016, Avanteos received legal advice that it did not have authority to deduct fees from superannuation members after their death. 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 superannuation products issued by Avanteos were defective, as they failed to tell superannuation 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 superannuation products were charged almost $700,000 in fees by Avanteos when it was not entitled to do so. Avanteos has remediated all affected customers.
This matter is the first criminal prosecution under s1021J(1) of the Corporations Act. It is an offence for the preparer of a disclosure document or statement to not take reasonable steps to ensure that a defective disclosure document is not distributed or is not accompanied by information that corrects the deficiency.
The matter is being prosecuted by the CDPP after an investigation and referral by ASIC.
The 18 charges were filed today in the County Court, Melbourne, and the matter is next listed for sentencing on 1 June 2022.
The maximum penalty for each offence, which occurred between 2016 and 2018, is $180,000.
Avanteos’s conduct was the subject of evidence given at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in the context of ‘Fees for No Service’ conduct in the financial sector – see Volume 1 of the Interim Report (pages 126 – 134) and Volume 2 of the Final Report (pages 62 – 102).