Members of a retail superannuation offering have been remediated close to $3 million after financial advisers failed to comply with legislation that would have seen them transferred to a lower cost MySuper offering in 2017.
More than 1266 smartMonday members have received about $2.6 million in compensation after two third-party authorised representatives failed to comply with legislation that required their super accounts to be transferred to Aon MySuper by 1 April 2017 unless they explicitly opted out.
As a result, the impacted members' account balances were lower than they should have been, requiring compensation to be paid in order to equal the financial position they would have been in had the advisers complied.
In a statement to Financial Standard, Aon Australia said: "In March 2018, Aon Hewitt Financial Advice (AHFA) voluntarily notified ASIC of suspected breaches of the Corporations Act by two of its third party authorised representatives out of a network of 185 advisers."
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"The breaches were notified to ASIC after an audit undertaken by Aon Compliance which indicated that the subject advisers were unable to provide sufficient evidence of informed instructions to switch the clients out of MySuper."
These breaches formed part of a Royal Commission case study, where Commissioner Hayne did not find any licensee breach on the evidence before Commission, Aon Australia said.
The remediation was paid for by AHFA, not smartMonday. Part of the business of AHFA has since been the subject of a management buyout, following Aon's decision in April 2019 to exit advice. AHFA is committed to fulfilling the remediation program.
"The compensation amount was calculated on the basis that had you moved into Aon MySuper on 1 April 2017, you would have paid different fees from this date and the investments in your superannuation may have performed differently - either better or worse. You may have also paid a different amount for insurance within your superannuation," a notice to members reads.
As at June 2019, APRA data shows smartMonday's total funds under management sitting at $5.5 billion. About 86% of this is in its MySuper option.
"Aon would like to assure its clients that in light of the learnings from this process, it has reviewed and will continue to review its compliance and audit procedures to ensure similar breaches do not occur in the future," Aon Australia said.