Superannuation Warehouse, an SMSF administration business, has been fined and had conditions imposed by the Federal Court of Australia, relating to statements on its website which were false, misleading or deceptive.
In May 2015 ASIC commenced action in the Federal Court of Australia (FCA) against SMSF administrator Superannuation Warehouse. This related to claims on its website of “Free SMSF Setup”.
The FCA has now ordered that Superannuation Warehouse pay a penalty of $25,000, place notices on its website, contact clients and establish a “Compliance, Education and Training Program.”
The Court found that Superannuation Warehouse “engaged in conduct in relation to financial services that was misleading or deceptive.” The claim of “Free SMSF Setup” was false because there was a fee for setup of an SMSF with a corporate trustee. Also, the online application form could not be submitted unless the potential client agreed to pay a fixed monthly fee.
The Superannuation Warehouse website was later updated to include as asterisk next to “Free SMSF Setup” in some, but not all, places. The asterisk corresponded to a statement in the footer of the website that “Free SMSF Setup was only available to individual trustees.”
The Court said this was still a contravention, though “less egregious.”
Superannuation Warehouse was ordered display on its website homepage a notice, for a period of one month, which includes the following statement:
On 30 October 2015, the Federal Court of Australia found and declared that statements on our websites offering “Free SMSF Setup” were false, misleading and deceptive because in fact we required an applicant to also authorise us to act as administrator of the SMSF, for which there is a fixed monthly fee. This was not clearly and prominently disclosed.
The Court noted that “there is no evidence that the conduct of SWA [Superannuation Warehouse] has caused loss or damage to clients or prospective clients. ASIC contends that the effects or consequences of the conduct are difficult to assess. That may be so in a strict sense, but I am not satisfied that any loss was likely to have been caused.”
ASIC welcomes decision
ASIC has welcomed the decision, with Deputy Chair Peter Kell saying: “Deciding to establish a self-managed superannuation fund is a significant financial decision. Consumers should not be misled by advertising, including online. ASIC considers that terms such as ‘free’ convey a strong impression to consumers and should not be used where there is any charge or cost associated with the product or service advertised.”
ASIC encourages providers of financial services to regularly review their websites and consider the guidance in Regulatory Guide 234 Advertising financial products and advice services including credit: Good practice guidance.
The full ruling can be found here: Australian Securities and Investments Commission v Superannuation Warehouse Australia Pty Ltd  FCA 1167 (30 October 2015).
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