Sydney-based First Capital Financial Planning has been found guilty of making misleading claims and convincing teachers to swap super funds.
On Friday the NSW Supreme Court found First Capital's super switching advice was misleading or deceptive and did not have a reasonable basis.
About 200 NSW government schoolteachers reportedly swapped from their industry fund to a retail fund after receiving advice.
ASIC began an enforceable undertaking against First Capital and the group has been ordered to write to its clients correcting the information they were given and reimburse them for any losses.
First Capital, using the business name Edplan, specialises in providing financial advice to NSW Government teachers.
ASIC took First Capital to court in December 2005, the first such action since the introduction of the super choice regime on July 1. It was part of the regulator's crackdown on super advice.
ASIC said between December 2004 and September 2005, First Capital advised 170 teachers to switch from their state government super, First State Super, to a super fund recommended by First Capital.
The fees payable in the recommended fund were much higher than the fees payable in First State Super.
The court found that the statements of advice (SOAs) did not properly explain the differences in fees between the First State Super and the recommended fund.
It found on most occasions the SOAs did not contain details about insurance, including the associated costs, which was available to clients in First State Super.
The SOAs also failed to highlight the impact higher fees and costs have on potential returns and some of the SOAs contained misleading comparisons between the past performance of the funds.
"The court orders serve as an important reminder to industry that advisers must give specific consideration to a client's existing superannuation fund before recommending a switch, whether or not it is on their approved product list," ASIC deputy executive director of enforcement Allen Turton said.
