Risk Regulatory Update
/BT to pay $20m for charging commissions for seven extra years after banned
The Federal Court has served a penalty of $20 million to BT Funds Management for charging commissions to almost 10,000 members in one superannuation fund for seven years after commissions were banned.
BTFM changed insurance premiums, which were included in commission payments, to members of Asgard INdepenence Plan Division Two even after commissions were banned in 2013 in the Future of Financial Advice reforms. Commissions on premiums were also paid to financial advisers even though members had opted out of the financial advice element of their account.
The misconduct was the result of system and processing errors, and inadequate risk management frameworks, the judge said, with the results eroding members’ balances. This case is one of six being brought against Westpac by the Australian Securities and Investments Commission (ASIC). Westpac will pay nearly $10 million in remediation to affected members by July 2022.
APRA suspends IP contract term requirement
The maximum terms for income protection policies have been suspended by the Australian Prudential Regulation Authority (APRA) for another two years, while giving the life insurance sector a warning that it is not doing enough to address the implementation of this measure.
A letter to life insurance companies from APRA said the suspension of individual disability income insurance (IDII) policy contract term measure will be in place for at least two years.
2022 Quality of Advice Review issues paper published
An issues paper for the 2022 Quality of Advice Review has been released to engage with industry to receive feedback on the Terms of Reference. The final draft of the Terms of Reference was published recently.
View the Quality of Advice Review Issues Paper
February adviser exam pass rate worst yet
Just 32 per cent of advisers have passed the February 2022 Financial Adviser Exam. In this exam, 333 financial advisers sat the exam with just 108 passing. Around 70 per cent of the advisers were resitting the February exam for the second or more time. This is the worst result so far, with the usual pass rate sitting at around 60-70 per cent.
CFS settles class action for $56m
About 100,000 Colonial First State superannuation members brought a class action against the wealth management firm alleging that CFS deliberately delayed transferring members into a cheaper MySuper fund and left them paying higher fees, paying financial adviser commissions and receiving lower investment returns.
The action was brought in 2019 by Maurice Blackburn lawyers, with a settlement
reached of $56.3 million, subject to court approval. A trial has been vacated and compensation should start to be paid. CFS has not admitted to wrongdoing.
