AFSL hit with $11m penalty over conflicted | Australian Markets
A financial planning licensee has been hit with a $11,030,000 Federal Court penalty after it was discovered to have breached conflicted remuneration guidelines and its advisers offered inappropriate ‘cookie cutter’ advice.
ASIC stated that DOD Bookkeeping which is in liquidation beforehand trading as Equiti Financial Services Pty had been the subject of the penalty following the regulator initiating motion.
Equity FS paid $130,250 in bonuses to 3 financial advisers who offered template advice to purchasers to roll over their super into self-managed super funds (SMSFs) and use these funds to buy property via a associated entity, Equiti Property Pty Ltd.
The Court discovered that within the case of 12 purchasers who gave proof to the Court, the advice offered was “cookie cutter” and didn’t consider every consumer’s particular person circumstances or goals.
The Court additionally discovered that the bonuses paid to the three advisers, which had been paid when the purchasers settled on property supplied via Equiti Property, influenced the advice they offered and breached conflicted remuneration legal guidelines.
Commenting on the result, ASIC Deputy Chair Sarah Court stated, “Misconduct exploiting superannuation financial savings is an ASIC enforcement precedence. In this case the Court discovered bonuses paid to advisors influenced the advice they offered, leading to poor financial outcomes for the shoppers concerned. Financial providers licensees who make use of advisers to supply personal financial advice need to make sure that they place their purchasers on the forefront.
“The size of today’s penalty demonstrates the seriousness of this misconduct.”
In his judgments, Justice Goodman noticed that “little or no heed was paid to the particular circumstances of the clients”, with purchasers not being given enough time to grasp the advice given to them and advice being focussed on “manoeuvring the clients into property purchases through SMSFs”.
His Honour stated, “The contravening conduct was plainly deliberate and extended over a period of several years”.
ASIC cancelled Equiti FS’s Australian financial providers licence on 7 November 2024.
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