Millennial super fund Spaceship has been fined for misleading conduct

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The company behind Spaceship superannuation — an online super fund pitched at millennials with a focus on tech stocks — has been fined by the corporate regulator for false and misleading conduct.

The Australian Securities & Investment Commission (ASIC) said Spaceship Financial Services Pty Ltd — the promoter of the Spaceship Super Fund — has paid a $12,600 fine for infringements under the ASIC Act. Spaceship’s trustee company Tidswell Financial Services Pty Ltd has also paid a $12,600 fine.

ASIC issued infringement notices to the two companies due to concerns it had around promotional statements used by the Spaceship Fund to prospective customers.

Spaceship told prospective members that “we will fight to get you the very best assets in your portfolio. We will measure companies in our portfolio based on their ability to provide defensibility of profits and high levels of product differentiation.”

That statement was deemed misleading by ASIC, because at the time 79% of Spaceship’s investments were allocated to passive index-tracking funds, which require no extra qualitative analysis.

Stockspot founder Chris Brycki — who raised concerns about Spaceship’s business model in March last year — said the infringements cast a negative light on the broader fintech industry.

“Spaceship told its members one thing when behind the scenes it was doing something very different,” Brycki told Business Insider.

“There may be members who moved their super to access what they believed to be active investments, when in reality they bought an index fund and could have lost insurance benefits from their previous fund.”

“This impacts consumer trust in the whole fintech industry — including the majority of businesses who are providing their customers with accurate disclosure about what they’re actually receiving.”

Spaceship Super — which has been backed by tech luminaries such as Atlassian’s Mike Cannon-Brookes and Peter Thiel — cut its fees last November after critics said its 1.6% management fee was uncompetitive.

At the time, Spaceship’s funds under management were reported to have grown to $150 million, up from $100 million earlier in the year.

“The accurate promotion of superannuation products is critical to enable Australian consumers to make well-informed financial decisions; particularly in this case given the Spaceship Fund was specifically targeting young investors,” said Peter Kell, ASIC’s deputy chair.

The fines form part of ASIC’s continued efforts to closely monitor new entrants into Australia’s superannuation sector.

The regulator said that while industry start-ups can provide a unique offering to clients, it’s critical that they provide clear and accurate information — particularly if the product is aimed at younger customers.