Australian Mutual Holdings has paid more than $20,000 in penalties after the Australian Securities and Investments Commission issued two infringement notices for alleged misleading statements in product disclosure statements.
According to ASIC, Trident Global Growth Fund and Trident Income Plus Fund—both entities of Australian Mutual Holdings—mislead consumers in their product disclosure statements (PDSs) up until October 2013.
While the statements claimed the majority of the funds’ assets were held by the funds’ custodian, ASIC says the majority of assets were held in an Australian Mutual Holdings trading account.
ASIC Commissioner Greg Tanzer said in a statement the financial services industry should take particular care not to mislead consumers.
“PDSs are key documents which investors use to make important financial decisions,” he said. “They must be accurate.”
The infringement notices imposed on Australian Mutual Holdings were worth $10,200 each.
Speaking to SmartCompany previously, Melissa Monks, special counsel at law firm King & Wood Mallesons, said ASIC is sending a strong message to the business community.
“This is a good reminder to ensure that the terms and conditions of the claims you make in a particular campaign are accurate because the fallouts can be quite significant,” she said. “These things come very easily to a regulator’s attention when they are so obviously wrong.”
While the payment of infringement notices is not an admission of a contravention of the Australian Securities and Investment Commission Act 2001, Monks said businesses need to be careful because infringement notices are a quick and easy enforcement mechanism for the corporate regulator.
“It is still not an ideal outcome and many consumers see it as some sort of admission,” she said. “Increasingly regulators are using these and particularly ASIC. This is a good warning to the financial services industry that they really need to get their messaging right because the regulator is very willing to act.”
Monks also stressed the significance of non-financial repercussions can have on a business.
“The brand damage that flows from something like this is significant,” she said. “And the lack of confidence customers will have in the company going forward.”
ASIC has taken action against several companies this year for misleading claims, with a total of $140,000 in penalties. In April, Virgin Money, a popular insurance and home loan provider, paid more than $30,000 for misleading customers through online and television advertising.
Australian Mutual Holdings were contacted for comment but did not respond prior to publication.
Broede Carmody is a former senior SmartCompany reporter. Before this, he was a co-editor of RMIT University’s student magazine Catalyst.
