A superannuation investment company that charged fees to nearly 500 dead members has been fined $1.7 million.
Senior management at Avanteos Investments, then a subsidiary of the Commonwealth Bank, learned in early 2016 that its product disclosure statements were defective and it was wrongly charging fees.
But it took 28 months to update the documents, during which time it wrongly charged 499 customers just shy of $700,000 in adviser service fees.
The fees, paid to financial advisers, were routinely deducted from accounts on 5399 occasions.
Avanteos’ practice was to continue deducting the fee after being notified that a member had died and until an account was closed, unless it received instructions to cease payment.
In early 2016, the firm which managed 18 superannuation funds, became aware disclosure documents made misleading or deceptive statements about its fees and did not contain required information including that the fee would continue to be deducted after death.
The company pleaded guilty to 18 charges over its failures and was on Wednesday fined by County Court Judge Trevor Wraight $1.71 million.
While the company’s conduct was serious and prolonged, it was not a deliberate and calculated plan to take money from clients, the judge said.
“It’s a case where (the) company, knowing of a defect, focused on itself and its own business model rather than its obligations to its members, whose funds they were entrusted with,” he said.
It has repaid the fees, as well as making payments for lost earnings on the funds invested.
Avanteos will also pay financial regulator ASIC $1.3 million to cover the cost of investigations into their conduct, which they self-reported.