ASIC has commenced civil penalty proceedings in the Federal Court against Mercer Financial Advice (Australia) Pty Ltd (Mercer) for allegedly making false or misleading representations to its customers about fees charged and services that were not provided, and for failing to provide fee disclosure statements.

ASIC Deputy Chair Sarah Court said. ‘These proceedings are another example of a large financial institution charging fees to customers that we allege it was not entitled to charge, being for financial services and advice those customers did not receive.’

‘Additionally, Mercer’s poor compliance systems led to allegedly misleading disclosure statements, which affect how customers make decisions about the financial services they are paying for,’ concluded Ms Court.  

ASIC claims that between July 2016 and June 2019 (being the period in which a civil penalty is sought by ASIC) Mercer made false or misleading representations on more than 5,500 occasions, by claiming that:

• it had provided all of the services it was required to provide, when it had not. Specifically, Mercer failed to provide review meetings to its customers, which were formal meetings with a financial adviser to track a customer’s progress against their financial plan and to review their financial position;

• the customer was obliged to pay fees that the customer was not obliged to pay; and
• the customer had a binding contract with Mercer when that was not the case.

ASIC further alleges Mercer failed to provide fee disclosure statements, or provided inaccurate statements, to more than 2,100 customers and failed to do all things necessary to ensure the financial services covered by its licence are provided efficiently, honestly and fairly.

Mercer has already completed a remediation program for more than 3,400 customers who were charged fees for financial advice that may not have been provided between January 2012 to June 2019, resulting in compensation of approximately $45 million.

ASIC is seeking declarations of contraventions and pecuniary penalties from the Court, as well as an order that Mercer be required to disclose its contraventions to the public.

The date for the first case management hearing is yet to be scheduled by the Court. 

Download 

Concise statement (PDF 1.4 MB)

Originating Process (PDF 1 MB)

Background 

ASIC has previously taken action against National Australia Bank (NAB) for failures relating to fees for no service and misleading fee disclosure statements. The Federal Court handed down a $18.5 million penalty against NAB for the contraventions (21-226MR).

ASIC has also previously commenced several other proceedings concerning charging fees for no service. Including against Westpac (22-097MR), Aware Financial Services (22-023MR), OnePath Custodians (21-350MR) and AMP (21-191MR).

As of 31 December 2021, six of Australia's largest banking and financial services institutions have paid or offered a total of $2.9 billion in compensation for fees for no service conduct (22-020MR).

Editor's note:

The proceeding will be listed for hearing on a date to be fixed after 28 November 2022.

Editor's note 2:

On 23 September 2022, ASIC and Mercer agreed to a Statement of Agreed Facts. The penalty hearing has been listed for 10:15am on 5 December 2022 to be heard in the Federal Court, Melbourne.

Editor's note 3:

The penalty hearing concluded on 5 December 2022. Judgment has been reserved.