Trustee firm, super fund in hot water

ASIC has commenced Federal Court action against Sargon-owned Tidswell Financial Services and the promoter of mobiSuper over breaches of best interest obligations.

Filed with the South Australian Federal Court, the corporate regulator is taking action against Tidswell Financial Services as the trustee of MobiSuper as well as its promoter, MobiSuper Pty Limited (Mobi) and its AFS licensee ZIB Financial (ZIB). Also named in the action is MobiSuper and ZIB Financial director Andrew Richard Grover.

Tidswell is owned by Sargon and holds an extended public offer entity RSE licence under the SIS Act, as well as an AFSL issued by ASIC. Its model is to partner with promoters to offer new super products. While it operates the fund, the promoter provides promotional and marketing services.

As trustee, Tidswell contracted Mobi as promoter, which in turn contracted ZIB to provide financial services.

ASIC is alleging that Tidswell and ZIB failed to do all things necessary to ensure the financial services covered by their respective AFSLs were provided efficiently, honestly and fairly.

It also alleges the general advice model used to promote the mobiSuper fund had insufficient regard for consumers' best interests and this was not adequately monitored by Tidswell and ZIB. According to documents filed with the court, the advice provided was personal in nature and provided without a Statement of Advice.

False and misleading statements about superannuation, insurance products and services were also made in the promotion of the fund, ASIC alleges. The group insurance available through mobiSuper is provided by TAL.

According to ASIC, Mobi offered an obligation-free 'lost super' search to consumers via online advertising campaigns with the primary objective of getting them to join the fund and roll their other super balances into Mobi-promoted products.

Further, ASIC alleges that during marketing telephone calls to consumers Mobi customer service officers made misleading claims about fee savings and equivalent insurance cover if consumers joined the fund. In doing so, ASIC said Mobi provided personal advice that was not in consumers' best interests.

For these reasons, ASIC is pursuing civil penalties against Tidswell and ZIB for advice given to consumers in breach of best interest obligations. It is also seeking penalties against Mobi and Grover for the misleading advertising and Mobi for the false and misleading claims made during the marketing phone calls.

ASIC said it is concerned about potential harm to consumers if trustees fail to adequately monitor the actions of their promoters.

The regulator is seeking a number of declarations, including under the Corporations Act that Tidswell and ZIB failed to comply with their obligations as licensees and, under the ASIC Act, that Mobi engaged in misleading conduct that Grover knew about. ASIC is also remedial advertising and probation orders, and costs.

The action was taken following consultation and collaboration with APRA, which also has responsibility for regulating Tidswell under the SIS Act, ASIC said.

"APRA has supported ASIC with its investigation and has provided ASIC with a delegation of certain functions and powers under the SIS Act in relation to Tidswell in order to achieve appropriate regulatory outcomes," the regulator said.

"ASIC and APRA support innovation in superannuation and acknowledge the place of professional trustees in bringing new and innovative products to the market, provided this is done in a way that prioritises the best interests of members."

Sargon also owns Diversa Trustees and CCSL Limited.

Read more: ASICMobiTidswell Financial ServicesZIB FinancialAndrew Richard GroverMobiSuper Pty Limited
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