ING DIRECT superannuation fund, Living Super, will compensate around 24,500 members approximately $5.38 million following concerns by the corporate regulator that its promotional material about fees were misleading.
The Australian Securities and Investments Commission (ASIC) said it was concerned Living Super was promoted between March 2015 and September 2016 as having “No Fees” for the “Cash Investment Option”, “No Investment and Administration fees” for the “Balanced Option” and having low fees options without making it clear that customers were paid a lower interest rate on the cash portion invested with ING Bank than the rate paid by ING Bank to its Saving Maximiser customers for the relevant investment options.
“Some of the promotions also did not indicate the “no fees or low fees” features may not continue should ING Bank no longer be the investment manager,” ASIC said.
“…some members of Living Super may have been misled into believing they would receive the same returns on cash investments held with ING bank as ING Direct banking customers with the Savings Maximiser product.”
ING Bank told ASIC that it would no longer be promoting Living Super based on “No Fees” or “No Investment and Administration Fee”.
“ING DIRECT found that some Living Super customers may have understood that the interest paid on their cash options would be eligible for ING DIRECT’s highest variable savings rate, including any bonus rates. This is not the case as interest rates for Living Super are set independently,” ING said in a statement.
“However ING DIRECT believes it could have been clearer in the communications and has decided to credit customers any difference.”
ING DIRECT said it was writing to all Living Super customer to explain the action and let customers know how much they would receive.
ASIC commissioner, Greg Tanzer, said: “Promotion of superannuation products based on low or no fees can be very influential on consumers”.
“This makes it very important to ensure any such promotion is not potentially misleading by reducing the benefits consumers receive in exchange for the no fees or low fees features,” Tanzer said.
ASIC also expressed disappointment that the bank was promoting Living Super using product inducements to clients separate from the super product such as cash payments.
“ASIC observes that promotions of this type are a bad practice that may encourage decisions to be made on the basis of short term considerations that may not reflect the needs of a member,” ASIC said.
ING DIRECT said they had more than 50,000 Living Super members.
