Mercer Financial Advice hit with fee for no service charges

Mercer Financial Advice is facing Federal Court proceedings initiated by the Australian Securities and Investments Commission over allegations the company made false and misleading representations to customers about fees charged and services not provided.

ASIC has announced the Federal Court action with its deputy chair, Sarah Court saying the proceedings were another example of a large institution charging fees to customers that the regulator was alleging it was not entitled to charge, being for financial service and advice the customer 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,” Court said.

ASIC is alleging hat 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.