Mercer Financial Advice has been ordered by the Federal Court to pay a $12 million penalty for breaching fee disclosure obligations and for wrongly charging fees to customers, ASIC has reported.
“This is a significant penalty for a financial advice provider,” said Sarah Court (pictured above), ASIC deputy chair. “Mercer failed in its obligation to provide fee disclosure statements to clients, provided misleading information in the disclosure statements it did provide, and charged its clients fees for services it was not entitled to charge.”
Court highlighted ASIC’s expectation for businesses to invest appropriately in their compliance systems, adding that failure to do so, as demonstrated by this latest outcome, would incur significant penalties.
Mercer violated sections of both the Corporations Act and ASIC Act from July 1, 2016, to June 30, 2019, when it neglected to invite more than 800 entitled clients to annual review meetings, withheld fee disclosure statements from 500-plus clients, issued more than 3,000 non-compliant fee disclosure statements to over 2,000 clients, and charged 761 clients over $4.7 million in fees for services not rendered, ASIC said.
The court found that Mercer’s shortcomings resulted from insufficient systems and processes to ensure compliance with financial services laws in its fee disclosure statements. Mercer was also found to have violated its obligation to provide financial services efficiently, honestly, and fairly.
In his judgment, Justice Timothy McEvoy said the contraventions in Mercer’s case were extremely serious.
“They were large in number, many clients were affected, large sums were involved, and they continued over a long period of time,” McEvoy said.
Mercer admitted to the misconduct.
Click here for the ASIC media release.
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