The Australian Securities and Investments Commission has toughened up following its victory in an appeal against Westpac over responsible lending and offering personal advice to customers dressed up as general advice.
In its first move in the area since the Federal Court overturned an embarrassing loss against Westpac in September, the regulator has taken on South Australian group Tidswell Financial Services, new superannuation entrant MobiSuper and Andrew Richard Grover, a director of Mobi and ZIB.
Tidswell, which provides the funds for Mobi investors, has 20,000 superannuation members and $796 million in funds under management.
ASIC’s case is built on allegations that Tidswell and ZIB, which holds the financial services license MobiSuper operates under, failed to adequately monitor Mobi’s promotion of Tidswell’s fund.
Mobi, the regulator claims, pushed its products through what it claimed was a ‘general advice model’ that took insufficient regard for consumers’ best interests.
In doing so, ASIC also alleges Mobi made false and misleading statements about superannuation, insurance products and services.
What ASIC objected to was what it claimed was Mobi’s offer of an obligation-free campaign to find “lost super” for members of the public. Behind the offer lay Mobi’s objective to get consumers to join its fund and roll their other super balances into Mobi-promoted products.
Mobi, a relative newcomer to the super world, describes itself on its on its website as “revolutionising the super industry through technology, innovation, and a customer-first focus”.
ASIC further alleges that, in marketing telephone calls to consumers, Mobi staffers made misleading claims about fee savings and equivalent insurance cover available if they joined up.
ASIC sees this as providing personal advice that was not in consumers’ best interests.
Under financial services legislation introduced from 2013, personal advice needs to be tailored to the needs of individuals and cannot be cranked out in telephone and other marketing campaigns aimed at the general public.
Such campaigns are defined as “general advice” and can only include basic information allowing the public to become aware of certain possibilities.
ASIC’s action against Tidswell and related companies appears to have been driven by its recent victory in its appeal against Westpac.
ASIC lost a case against Westpac in September when Justice Nye Perram of the Federal Court found in the bank’s favour in a case brought by ASIC as a test of the responsible lending laws.
ASIC had alleged that Westpac breached the laws by not properly taking account of customers’ individual declared expenses when they were applying for home loans.
Instead it used a benchmark ‘Household Expenditure Measure’ which drew flack at the banking royal commission for being set too low for many customers.
Using the benchmark saw thousands of customers given loans larger than they would have got had the bank assessed them on their actual living costs.
The court at first found in favour of Westpac’s defence of ASIC’s charges in a blow to the regulator which had claimed it would take account of criticism in the Hayne banking royal commission to take a tougher line against banking misconduct.
That was a massive humiliation for the regulator and a significant dint in its morale.
However, a three-judge panel of the Federal Court unanimously overturned the decision in October giving the regulator the boost which has allowed it to take the current action.
The New Daily is owned by Industry Super Holdings
The post ASIC toughens up with new action after Westpac appeal victory appeared first on The New Daily.
**Business and Marketing support on best price; Hit the link now----> http://bit.ly/2HsQmSi