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					GROUP: Savings and Superannuation
SERVICE: Superannuation
Complaint No : 109081
YEAR: 2001

Casebook Index: Misleading information, Nature of benefits, Withdrawal -
Values.


Complaint

In 1997, C effected retirement savings plans with a company which was subsequently
purchased by P. Because C was aware superannuation schemes normally involved
significant entry/establishment fees, C queried this matter with the agent. The agent
gave an assurance there were no entry/establishment fees. Because of the assurances
provided by the agent, the documentation issued by the company was not examined in
detail when it was received.

In 1999, C made enquiries about the plans’ values and was horrified to learn that the
values were considerably less than the contributions paid. Subsequent enquiries
showed this was primarily attributable to the charges made. It was also discovered
that, for one of the plans, benefits were locked-in to age 50 and could only be
withdrawn in limited circumstances before then. This was contrary to C’s
understanding, as the intention was to establish a savings plan where money could be
accessed to help to reduce her mortgage.

The unlocked plan was terminated and C was seeking an adjustment to the amount
paid, in view of the assurances provided by the agent regarding fees. For the other
plan, C believed it should be altered to an unlocked basis with no fees, as agreed by
the agent.

Assessment

The Case Manager could not be certain about the manner in which the agent had
described charges and, in particular, the initial charge. The agent had written “$250
per month. No Set up cost” on the cover of the product brochure which was left with
C. However, although there were reduced fees where the contribution was $3,000 per
annum or more, initial charges still applied. The agent was aware of this and would
have been aware the details were included in the brochure given to C. Consequently,
there was no reason to provide incorrect information about the charges. In addition,
the agent would have been aware that details about the initial charge would be
disclosed in documentation issued by the company through a combination of:

     the Member’s Guide, which stated the basis on which the initial charge was
      calculated;
     the Membership Certificates, which showed the amount of the plans’ initial
      charges; and
     the illustrations included in the letters enclosing the documentation, which
      showed it would be about 5 years before the plans’ values were likely to match
      the contributions paid.
Against this background and knowing a free-look period would be offered, there was
no benefit to be gained by attempting to disguise the charges or provide misleading
information in relation to them. (If the position was different to C’s understanding,
the plans could have been cancelled in the free-look period with a refund of
contributions.)

Given C’s concern about the charges, the Case Manager felt it was a little surprising C
had not examined the documentation, at least on a cursory basis. If this had been
done, it would have been apparent there were initial charges.

The Case Manager found there was no evidence to show the plans had not been
administered in accordance with their terms and conditions. It was concluded there
was no basis to support a request for the initial fees to be waived.

The application for the locked-in plan was completed just over a month after the
application for the unlocked plan. Based on C’s requirements, it appeared the second
application had been incorrectly completed by the agent and that this was not noticed
by C when signing the application. In addition, because the documentation issued by
the company was not examined in detail, it was not picked up at that time. P agreed
to alter the locked-in plan to an unlocked basis. This would result in the application
of a higher renewal charge. C was to contact P, if she wished to pursue this offer.

Result Complaint not upheld