On Friday, the Australian Securities and Investments Commission (ASIC) announced it has taken action against the trustee of HESTA for alleged false or misleading statements made in the super fund’s marketing material.
HESTA has paid $48,600 to comply with three infringement notices issued by ASIC regarding alleged false or misleading statements about its “balanced growth” option.
According to ASIC, these statements referenced 10-year performance figures of the balanced growth option but did not note the period that the figures related to.
ASIC alleged that these statements may have misled consumers into believing the performance figures used were up to the present day. Instead, the 10-year period used by HESTA to calculate the figures had ended between five and 14 months prior to publication.
ASIC said it was concerned that the past performance figures advertised by HESTA were higher than the more recent performance figures available during the period of publication.
“ASIC was concerned that these figures were misleading because consumers were not given all the necessary information and might have assumed the fund was performing better than it was,” said ASIC deputy chair Sarah Court.
In a statement on Friday, a HESTA spokesperson said: “HESTA understands that the news that ASIC has issued infringement notices to HESTA will be as disappointing for our members as it is for us, especially given the high standards to which HESTA holds itself”.
“We take regulatory compliance very seriously. We have cooperated with ASIC’s investigation and acknowledge and have acted on ASIC’s concerns. We have since improved our internal processes and strengthened our controls.”
The performance figures that were the subject of ASIC’s concerns appeared in Facebook and Instagram advertisements and in a webinar on HESTA’s website at various times between 23 August 2022 and 18 July 2023.
The infringement notices were issued in relation to statements contained in three communications made by HESTA. Specifically, ASIC said it was concerned that:
- Between 23 August 2022 and 21 October 2022, HESTA published an advertisement on Facebook and Instagram stating that its balanced growth option “has returned 8.87 per cent average returns p.a. over the past 10 years”. The date range was not provided in the advertisement. ASIC noted that the average return for the 10-year period to the time of the advertisements was between 8.01 per cent and 8.51 per cent.
- Between 21 October 2022 and 20 June 2023, HESTA published an advertisement on Facebook and Instagram stating that the balanced growth option “has returned 8.53 per cent average returns p.a. over the past 10 years”. The date range was again not provided in the advertisement. ASIC said that the average return for the 10-year period to the time of the advertisements was between 7.90 per cent and 8.23 per cent.
- Between 9 December 2022 and 18 July 2023, HESTA published a webinar on its website regarding market volatility representing that a hypothetical consumer would have realised a net return of approximately $67,000 on a $50,000 investment by staying in the balanced growth option for 10 years “right up to today”, which ASIC noted was incorrect.
“Funds commonly focus on performance in their advertising and promotional material. Advertising involving performance figures needs to be clear and transparent about how those figures are calculated. This allows consumers to make informed decisions, including choosing or moving between funds,” said Ms Court.
“For many Australians, superannuation is the biggest investment decision of their life and it is a decision that must be based on accurate information.”
ASIC noted that payment of an infringement notice is not an admission of liability.
Same old story. ASIC witch-hunting to justify its existence. So pay up, Hesta fund-members.
More like ASIC revenue-chasing…but they do have a point. I get tired of looking at published so-called performances that never seem to stack up against the far too frequently lesser amounts I measure as the actual performance at the end of each month of a client’s investments. That goes not just for otherwise well performing super funds like HESTA, but the majority of fund managers too.
It’s worse than this, some funds talk about “compounding returns” by compounding out the percentage returns per annum over the multi year period then dividing by the number of years what a con!