ING Direct will pay thousands of superannuation customers $5.4 million in compensation, after the corporate regulator said "no fees" claims in its advertising risked misleading customers.
The Australian Securities and Investments Commission raised concerns with the online bank over advertising that promoted the fact it was not charging fees - even though the products in question paid customers lower interest rates than offered elsewhere by the bank.
![ASIC said ING may have misled customers in its advertising.](/web/20160914182659im_/http://www.smh.com.au/content/dam/images/g/r/4/s/c/h/image.related.articleLeadwide.620x349.gragkv.png/1473223211218.jpg)
ASIC highlighted ING superannuation products that promised "no fees" for the "cash investment option" and "no investment and administration fees" for its "balanced option."
The bank did not make it clear that customers who took up this option would be paid a lower rate of interest than if they had put their money in ING's "savings maximiser," ASIC said.
The regulator says customers may have therefore been misled into thinking they would receive the same returns through ING Bank as as with the savings maximiser products. ING will pay 24,500 customers a total of $5.4 million, an average payment of about $220.
The watchdog also expressed "disappointment" than ING was promoting its super product by offering inducements such as cash payments - which it says is "bad practice" because it may encourage short-term thinking that is not in a customer's interest.
"This action reflects ASIC's ongoing focus on the disclosure of fees and costs in superannuation," ASIC commissioner Greg Tanzer said in a statement.
"Consumers need to be able to make informed decisions about their superannuation and managed investments, based on accurate and consistent fees and costs disclosure."
"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", Mr Tanzer said.
ING maintained that interest rates for the superannuation product in question were set independently from its "savings maximiser" rates - but conceded it should have been clearer in its communicators.
The bank will write to affected customers, letting them know how much they will be paid.
ASIC has been putting wealth managers under the microscope over their disclosure of costs and fees.