Australian Securities and Investments Commission v Mercer Financial Advice (Australia) Pty Ltd

The Australian Securities and Investments Commission (ASIC) brought proceedings against Mercer Financial Advice (Australia) Pty Ltd (MFA) for multiple contraventions of the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 (ASIC Act). MFA, a major provider of financial services in Australia, was found to have contravened sections 962P, 962S(1), 912A(1)(a) and (c) of the Corporations Act, as well as sections 12DB(1)(a), (e) and (i) of the ASIC Act. The contraventions included charging ongoing fees to clients after their arrangements had been deemed terminated, failing to provide certain clients with a "fee disclosure statement," and making false and misleading representations in fee disclosure statements. MFA admitted to the contraventions and jointly proposed declarations with ASIC.

The primary legal issues the court had to decide involved whether the proposed declarations of contravention were appropriate, and if so, what the appropriate penalty should be. The court needed to consider the seriousness of the contraventions, the number of affected clients, the sums involved, the duration of the contraventions, and the mitigating factors presented by MFA. The court also had to consider ASIC's application for an adverse publicity order.

The court found that the contraventions were extremely serious, affecting many clients and involving large sums of money over an extended period. The contraventions undermined the reliability, good faith, fairness, and honesty expected in the financial services market. However, the court also recognised significant mitigating factors, including MFA's early reporting of the breaches, its cooperation with ASIC, significant changes to its systems and processes, substantial personnel changes, and comprehensive remediation of affected clients. The court decided that a penalty of $12 million was appropriate to achieve the objectives of specific and general deterrence. Additionally, the court made an adverse publicity order in the form of a press release, directing MFA to publish a Misconduct Alert detailing the contraventions.

In summary, the Federal Court found MFA to be in breach of multiple statutory provisions and ordered a penalty of $12 million, along with an adverse publicity order. This decision serves as a reminder to all businesses of the importance of adhering to legislated norms of corporate behaviour and the need for robust systems and processes to prevent such breaches in the future.