1. Executive Summary
In Australian Securities and Investments Commission v OnePath Custodians Pty Ltd [2023] FCA 1485, Stewart J approved agreed declarations and imposed a $5 million pecuniary penalty on OnePath Custodians Pty Ltd for misleading superannuation members about Adviser Service Fees.
OnePath was the trustee of the OnePath MasterFund and, from 13 April 2019, the Retirement Portfolio Service. The proceeding concerned members of the Integra Super product who had left an employer-sponsored plan and been transferred to the product’s personal division. Once transferred, those members gained the right to cancel the Adviser Service Fee themselves and were generally no longer entitled to receive services from the employer’s plan adviser. OnePath’s communications did not properly explain those changes.
The Court declared that OnePath contravened:
- s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth), by engaging in misleading or deceptive conduct;
- ss 12DB(1)(g) and 12DB(1)(i) of the ASIC Act, by making false or misleading representations about fees and members’ cancellation rights; and
- s 912A(1)(a) of the Corporations Act 2001 (Cth), by failing to do all things necessary to ensure that its licensed financial services were provided efficiently, honestly and fairly.
Approximately 16,210 members were charged about $3.788 million in Adviser Service Fees during the relevant period. The Court also ordered OnePath to publish an adverse publicity notice and pay $400,000 towards ASIC’s costs. All affected members had been remediated through repayment of the fees plus interest.
The practical significance is clear: superannuation trustees must ensure that member communications accurately explain fee arrangements, service entitlements and cancellation rights when members move between employer and personal divisions. Product administration, disclosure and fee-deduction systems must operate as an integrated control environment.
2. Citation and Context
Case: Australian Securities and Investments Commission v OnePath Custodians Pty Ltd
Neutral citation: [2023] FCA 1485
Court: Federal Court of Australia
Judge: Stewart J
Date: 29 November 2023
File: NSD 1306 of 2021
Procedural stage: Agreed liability, declarations, penalty, adverse publicity and costs
Relevant period: 15 December 2015 to 30 November 2021.
The parties filed an amended statement of agreed facts and admissions under s 191 of the Evidence Act 1995 (Cth). Stewart J accepted the agreed facts as coherent, probable and credible, while recognising that the Court remained responsible for determining whether the evidence supported the proposed declarations and whether the agreed penalty fell within an appropriate range: at [8]–[9].
3. The Adviser Service Fee Arrangement
Integra Super included employer-plan members whose accounts were linked to their employment. Under the employer-plan arrangement, the principal employer and the relevant plan adviser agreed the Adviser Service Fee.
When a member left the employer:
- the member was de-linked from the employer plan;
- the account was transferred to the personal division;
- the member acquired the right to terminate the Adviser Service Fee by giving written notice to the trustee; and
- the member was generally no longer entitled to receive the services for which the fee had originally been arranged.
OnePath nevertheless continued to deduct Adviser Service Fees and issued communications that did not disclose, or positively misrepresented, the member’s new rights and service position.
4. The Two Courses of Conduct
The Court treated the contraventions as two courses of conduct for penalty purposes.
De-linking letters
Between 15 December 2015 and approximately 9 May 2020, OnePath sent de-linking letters to 766 previously linked members.
The letters explained that fees and insurance premiums would change when the member moved to Integra Super Personal, but did not explain that the member now had the unilateral right to terminate the Adviser Service Fee. The accompanying “Changing Jobs Kit” discussed ways to reduce fees and taxes but omitted this cancellation right.
In context, the letters represented that the member did not have the right to cancel the Adviser Service Fee when the member did have that right. OnePath amended the letters after 9 May 2020 to cure the defect: at [13].
Annual statements
OnePath also issued annual statements to previously linked members.
The 2015–2016 statements were sent to approximately 15,962 members between September and December 2016. Later statements were sent to approximately 7,250 members between October 2017 and November 2021: at [14]–[15].
The statements represented, expressly or by implication, that:
- negotiation or cancellation of the Adviser Service Fee remained a matter between the former employer and plan adviser;
- the member had agreed to the fee;
- the fee was paid for advice or services provided to the member; and
- the member did not have an independent right to cancel the fee.
Those representations were misleading because the fee had originally been agreed between the former employer and plan adviser, the member had acquired a unilateral cancellation right, and most affected members were not entitled to receive the relevant advice services after de-linking.
5. Contraventions
| Act | Section | Duty or prohibition | Conduct | Finding |
|---|---|---|---|---|
| ASIC Act 2001 (Cth) | 12DA(1) | Prohibits misleading or deceptive conduct in relation to financial services | De-linking letters and annual statements misrepresented members’ rights, fee arrangements and service entitlements | Established |
| ASIC Act 2001 (Cth) | 12DB(1)(g) | Prohibits false or misleading representations about the price of financial services | OnePath represented that affected members were liable to pay Adviser Service Fees on the stated basis | Established |
| ASIC Act 2001 (Cth) | 12DB(1)(i) | Prohibits false or misleading representations concerning the existence or effect of a right | OnePath failed to disclose, and misrepresented, members’ unilateral right to cancel the fee | Established |
| Corporations Act 2001 (Cth) | 912A(1)(a) | Licensee must do all things necessary to ensure financial services are provided efficiently, honestly and fairly | OnePath issued misleading communications and allowed fee deductions and payments to advisers to continue | Established |
The declarations identify approximately 15,962 members as recipients of the representations supporting the s 12DB findings. The broader s 912A declaration records that approximately 16,210 members had about $3,787,966.21 deducted from their accounts during the relevant period.
6. Section 912A(1)(a): Efficiently, Honestly and Fairly
The s 912A(1)(a) contravention was not confined to defective wording in isolated documents. It reflected an end-to-end failure involving:
- inaccurate member communications;
- failure to inform members of changed cancellation rights;
- continuing deductions by the fund administrator;
- payment of the deductions to plan advisers; and
- the continuation of that process over several years.
The case demonstrates that the efficiently, honestly and fairly obligation can be contravened where communications, administration and fee systems collectively produce unfair outcomes, even without deliberate dishonesty.
The conduct persisted from December 2015 until approximately November 2021. The Court nevertheless accepted that it was not deliberate or reckless and that OnePath did not retain the fees for itself; the amounts were paid to the relevant advisers: at [23].
7. Pecuniary Penalty
The parties jointly proposed an aggregate pecuniary penalty of $5 million, divided notionally into:
- $2.5 million for the de-linking-letter course of conduct; and
- $2.5 million for the annual-statement course of conduct.
Stewart J was satisfied that the amount fell within the appropriate range, even though the Court might have selected a different figure without the parties’ agreement: at [18].
The applicable maximum penalty for an individual contravening act or omission varied according to timing, ranging from approximately $1.8 million to $11.1 million. Because there were a very large number of individual contraventions, the theoretical aggregate maximum was not a meaningful guide and could not be applied mechanically: at [21].
The Court applied the course-of-conduct principle because the separate contraventions within each category shared substantially the same factual and legal features. Treating every communication as an independently penalised event could have produced double punishment without improving the penalty analysis: at [22].
Penalty considerations
The Court considered:
- the need for specific and general deterrence;
- the number of affected members;
- the extended duration of the conduct;
- the amount of fees deducted;
- the absence of deliberate or reckless conduct;
- the fact that OnePath did not retain the Adviser Service Fees;
- system and practice improvements;
- full member remediation;
- apology letters;
- voluntary reporting to ASIC; and
- OnePath’s cooperation in reaching the agreed outcome.
Stewart J emphasised that civil penalties must impose a sufficient “sting or burden” to secure deterrence: at [20].
8. Remediation, Adverse Publicity and Costs
OnePath repaid the affected members the Adviser Service Fees plus interest, with the stated objective of restoring them to the position they would have occupied had the fees not been deducted. It also sent apology letters and modified its systems so that no previously linked member was paying the relevant Adviser Service Fee from about January 2021: at [24].
The Court ordered OnePath to publish an adverse publicity notice:
- for at least 90 days on the public OnePath superannuation and investment website; and
- for at least 365 days on the logged-in customer and adviser webpages.
OnePath was also ordered to pay $400,000 as a contribution to ASIC’s costs.
9. Governance and Compliance Significance
Member transitions require explicit control ownership
Moving a member from an employer division to a personal division changes legal rights, fee arrangements and service entitlements. Trustees should assign clear responsibility for identifying every legal and operational consequence of that transition.
Silence can be misleading
A communication may be misleading even where individual statements are literally accurate. Omitting a material new right, particularly a right to cancel an ongoing fee, can create a misleading overall impression.
Disclosure and administration must align
The case was not only a disclosure failure. The trustee’s administrator continued deducting fees while communications failed to explain the members’ rights. Product, legal, operations, communications and administration controls must be reconciled.
Fees must correspond with genuine service entitlement
Trustees should not assume that a fee remains valid merely because it was valid when first established. Trigger events such as leaving employment, changing divisions or ceasing an advice relationship must initiate a review of:
- fee authority;
- member consent;
- cancellation rights;
- service entitlement; and
- adviser payment arrangements.
Historical systems require proactive review
The Court recorded that approximately $19 million in Adviser Service Fees had been deducted after July 2004, although the penalty proceeding focused on approximately $3.788 million deducted during the pleaded period: at [16]. Legacy arrangements should be periodically reassessed against current legal rights and actual member circumstances.
10. Risk Management and Compliance Recommendations
| Audience | Control type | Legal rationale | Risk indicator | Practical control |
|---|---|---|---|---|
| Trustee board | Governance | Trustees remain accountable for member communications and deductions | Fees continue after employment or division changes | Board-approved fee-governance framework |
| Product governance | Preventative | Product transitions can alter legal rights | Employer member moved to personal division | Transition-impact assessment and control checklist |
| Operations | Preventative | Fee deductions require continuing authority | System applies legacy fee without reassessment | Automated fee-stop or reauthorisation trigger |
| Legal and compliance | Detective | Silence may create a misleading impression | Disclosure explains fee amount but not cancellation rights | End-to-end legal review of member communications |
| Communications | Preventative | Documents must reflect the member’s actual position | Template reused across differing member cohorts | Cohort-specific templates and legal sign-off |
| Adviser governance | Detective | Fees may continue where no service entitlement exists | Payment to adviser after member leaves employer plan | Service-entitlement and fee-recipient reconciliation |
| Internal audit | Detective | Administration and disclosure may diverge | Accurate policy document but incorrect system outcome | Test communications, deductions and payments together |
| Remediation | Corrective | Affected members require restoration | Historical deductions without valid service entitlement | Cohort identification, repayment and interest methodology |
11. Recommended Next Steps
Superannuation trustees and platform operators should:
- map every member event that changes fee rights or service entitlements;
- identify all fees that continue automatically after employment, plan or division changes;
- reconcile fee deductions against current authority, consent and actual service eligibility;
- review de-linking, transfer and annual-statement templates for material omissions;
- build automated cancellation or reauthorisation controls into administration systems;
- test whether adviser payments continue after advice entitlements cease;
- include member-rights accuracy in product-governance and internal-audit programs; and
- establish a documented remediation framework covering population identification, interest and customer communications.
12. Orders and Remedies
| Order or remedy | Legal basis | Amount or scope |
|---|---|---|
| Declarations — misleading or deceptive conduct | ASIC Act, s 12DA | De-linking letters and annual statements |
| Declarations — false or misleading fee representations | ASIC Act, s 12DB(1)(g) | Approximately 15,962 members |
| Declarations — false or misleading representations about rights | ASIC Act, s 12DB(1)(i) | Approximately 15,962 members |
| Declaration — efficiently, honestly and fairly | Corporations Act, s 912A(1)(a) | Conduct from December 2015 to November 2021 |
| Pecuniary penalty | ASIC Act | $5 million |
| Adverse publicity | ASIC Act, s 12GLB; Corporations Act, s 1101B(1) | Public and logged-in website notices |
| Costs contribution | Court order | $400,000 |
| Remediation | Completed before orders | Fees plus interest repaid |
13. Broader impact
This judgment reinforces the ASIC’s commitment to upholding high standards in the financial services industry.
It serves as a precedent for the interpretation and enforcement of misleading or deceptive conduct provisions, influencing future regulatory actions and judicial decisions in this area.
The case highlights the ongoing need for financial services businesses to prioritise consumer protection in their operational and communication strategies.
This case is particularly significant as it provides a clear judicial stance on the obligations of financial service providers to avoid misleading or deceptive practices, emphasising the importance of maintaining integrity and transparency in all aspects of financial services.
This analysis is suitable for internal legal and compliance review, but final positions should be confirmed against the complete judgment, agreed facts, parties’ written submissions and current law.