CommSec admits to overcharging customers $4.3 million in fees
ASIC has commenced civil proceedings against CommSec and AUSIEX in the Federal Court.
CommSec overcharged brokerage fees to customers on 120,933 occasions totalling $4,352,194 between August 2010 and February 2020, ASIC alleges and CommSec has admitted.
CommSec and AUSIEX also allegedly failed to comply with their best execution policies and procedures, did not provide accurate confirmations to customers for certain market transactions, failed to comply with client money reconciliation requirements and failed to include the required intermediary identification in regulatory data submitted to relevant market operators.
The regulator alleges there were systemic compliance failures at the trading platform and that CommSec and AUSIEX breached the market integrity rules, Corporations Act and ASIC Act.
ASIC alleges the conduct spanned a significant period of time and involved failures across multiple systems and business areas. Commsec and AUSIEX submitted over 60 notifications to ASIC relating to the conduct.
Due to that significant period of time, ASIC said it is of the view that CommSec and AUSIEX did not have adequate systems and processes in place to ensure compliance.
"CommSec and AUSIEX have co-operated with ASIC's investigation and entered into a Statement of Agreed Facts and Contraventions (SOAFAC)," ASIC said.
"ASIC alleges, and CommSec and AUSIEX have each admitted, a contravention of s912A(1)(a) of the Corporations Act in that they failed to do all things necessary to ensure that the financial services covered by their respective AFS licences were provided efficiently, honestly and fairly by reason of various failures in systems, processes and people as set out in the SOAFAC."
CommSec and AUSIEX have entered into a compliance agreement with the regulator. This will involve a review by an independent expert.
Among the issues raised on best execution policy disclosures, ASIC found and CommSec admitted that it failed to consider ASX Centrepoint as an execution centre for clients.
Usually, ASIC would pursue a matter like this through the Markets Disciplinary Panel but given the severity and duration of the breaches, ASIC is seeking a civil penalty.
CommSec has appeared before the Markets Disciplinary Panel seven times since 2012, receiving fines total more than $1 million.
Both CommSec and AUSIEX are fully owned by the Commonwealth Bank, though AUSIEX was acquired Nomura Research Institute in April 2020 with the transaction yet to be finalised.