The Federal Court has dismissed Australian Securities and Investments Commission (ASIC) civil penalty proceedings against Diversa Trustees, ruling the business did not fail to take reasonable steps to ensure its adviser representatives complied with financial services laws.  

ASIC had alleged the superannuation trustee breached the law by allowing Australian Super Finder, the Australian Dealer Group, and financial adviser Nizi Bhandari, to sign consumers up to its YourChoice Super product between March 13 2019 and December 18 2020. 

Mr Bhandari was principal of the Australian Dealer Group, which operated the Australian Super Finder website for customers looking for their lost super. 

ASIC claimed the “free” super search was to lure in prospective customers and those who did switch to YourChoice became liable to pay additional fees and risked losing their insurance benefits. The regulator also alleged they had signed up to a super account that may not be in their best interests. 

Justice Catherine Button, who handed her decision this month, ruled the regulator has not made out its case that Diversa “knew or ought to have known” about the operations of its representatives. 

“ASIC’s underlying concern (or at least one distinct concern that emerged more clearly during the trial) was that consolidation into YourChoice Super was simply not in the best interests of the customers…or at least there was a risk that that was the case,” Justice Button wrote in her ruling. 

“It is of the nature of a general advice model that the personal circumstances of an individual are not considered. 

“I do not consider that being aware that members to whom Diversa was issuing interests in YourChoice Super had come to the product under a general advice model means that Diversa should not have been willing to issue interests to them.” 

ASIC says it is “carefully” reviewing the judgment. Deputy Chair Sarah Court said the regulator pursued the case as part of its focus on trustee oversight of advice. 

The regulator permanently banned Mr Bhandari from providing financial services and engaging in credit activities in March 2021. 

ASIC found he had acted dishonestly while assisting consumers to find and consolidate their superannuation and obtain hardship payments. 

Click here for the ruling.