Some of Australia’s biggest firms came under scrutiny from ASIC this year. Here are some of the most prominent moves that the regulator took in the second half of 2023:
In July, ASIC commenced civil penalty proceedings in the Federal Court against Vanguard Investment Australia over allegations of greenwashing.
The regulator accused Vanguard of misleading conduct concerning claims made about certain ESG exclusionary screens applied to investments in the Vanguard Ethically Conscious Global Aggregate Bond Index Fund (Hedged).
ASIC alleged that Vanguard made false and misleading statements and engaged in conduct liable to mislead the public in representing that all securities in the fund were screened against certain ESG criteria.
The regulator also commenced civil penalty proceedings in the Federal Court against Active Super in August over allegations of greenwashing.
The regulator accused Active Super of misleading conduct and making misrepresentations to the market about claims that it was an ethical and responsible super fund.
According to ASIC, Active Super represented on its website that it eliminated investments that posed too great a risk to the environment and the community. The fund also indicated that it had added Russia to its list of excluded countries following the invasion of Ukraine.
However, ASIC alleges that Active Super, which manages around $13.5 billion in assets for 89,000 members, exposed its members to investments it claimed to restrict or eliminate.
In September, ASIC commenced civil penalty proceedings in the Federal Court against Westpac over alleged breaches of the National Credit Code and the National Credit Act.
The regulator alleges that, between 2015 and 2022, a deficiency with Westpac’s online hardship notice process resulted in 229 of the bank’s customers not receiving a response to their applications for hardship assistance within the required 21-day time frame.
ASIC noted that all of these customers told Westpac they were experiencing financial hardship and many told the bank about difficult circumstances and vulnerabilities, including an inability to work, impacts of serious medical conditions or carer responsibilities.
Furthermore, in some cases, ASIC said that customers endured debt collection activities by Westpac while waiting for the bank to respond to their hardship notices.
Also in September, ASIC commenced civil penalty proceedings against the trustee of Australia’s largest super fund alleging failures to address multiple member accounts.
ASIC alleges that for almost 10 years, AustralianSuper failed to implement adequate policies and procedures to identify members who held multiple AustralianSuper accounts and to merge those accounts, where a merger was in the member’s best interests.
AustralianSuper then continued to charge multiple sets of fees and insurance premiums to these members. Between 1 July 2013 and 31 March 2023, approximately 90,000 members were affected, with total cost to members reaching approximately $69 million.
Later in September, the Federal Court ordered NAB to pay a $2.1 million penalty for continuing to charge periodic payment fees despite knowing that it was wrongfully overcharging its customers.
The court found that, between January 2017 and July 2018, NAB engaged in unconscionable conduct by continuing to charge fees when it knew it had no contractual entitlement to do so.
The big four bank wrongfully charged periodic payment fees on 74,593 occasions, totalling $139,845 to 2,888 of its personal banking customers and 513 business banking customers.
In November, the Federal Court ordered super trustee OnePath to pay a $5 million penalty for making false or misleading representations about its right to continue charging fees, and for failing to provide services to members “efficiently, honestly and fairly” due to its “misleading conduct” and by deducting fees when not entitled to do so.
The court found that, between December 2015 and November 2021, OnePath made false or misleading representations to members of the super product Integra Super about adviser service fees and deducted $3.8 million in fees from members for advice services they did not receive.
OnePath told members they had to pay a fee for advice from a “Plan Adviser” even after the member had been transferred to a division of Integra Super where they were not entitled to receive advice services.
ASIC deputy chair Sarah Court noted that member services failures and misconduct resulting in the erosion of super balances will be enforcement priorities for ASIC in 2024.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.