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17-069MR ASIC acts against Melbourne-based financial advice provider for alleged contraventions of FoFA obligations
ASIC has commenced proceedings in the Federal Court of Australia against Wealth and Risk Management Pty Ltd (WRM), and related companies Yes FP Pty Ltd (Yes FP) and Jeca Pty Ltd (trading as Yes FS) (Yes FS), in relation to various alleged breaches of the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, including alleged breaches of best interests obligations. ASIC is seeking injunctive relief, declarations of contraventions and financial penalties.
WRM is licensed to advise retail clients about, and deal in, life risk insurance and superannuation products. WRM authorises advisers, generally employed by WRM’s corporate authorised representative Yes FP, who provide personal financial advice to retail clients referred to them by Yes FS, via the website yesfs.com.au.
ASIC alleges that:
- on numerous occasions since December 2015, WRM Advisers have provided advice that is conflicted and in breach of the best interests obligations contained in the Corporations Act;
- WRM has breached s912A(1) of the Corporations Act by not:
- doing all things necessary to ensure that the financial services covered by its licence are provided efficiently, honestly and fairly; and
- has not taken reasonable steps to ensure that its representatives comply with financial services laws;
- Yes FS has contravened s911A and/or s911B of the Corporations Act by carrying on a financial services business without holding an AFSL;
- Yes FS has contravened s1041H of the Corporations Act 2001 and s12DA of the ASIC Act by engaging in misleading and deceptive conduct; and
- WRM, Yes FS and Yes FP contravened s12CB of the ASIC Act by engaging in unconscionable conduct in connection with the supply or possible supply of financial services.
The first hearing of the matter is listed before the Federal Court of Australia at 9:30am on 31 March 2017.
Part 7.7A of the Corporations Act 2001 (Cth) was enacted as part of the “Future of Financial Advice” (FoFA) reforms which are aimed at ensuring that financial advice companies and their advisers act in the best interests of the client. ASIC alleges in this case that WRM has breached s961L of the Corporations Act.
Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure provides guidance to help licensees understand ASIC's expectations for meeting the best interests duty, and to ensure that it is consistent with ASIC's guidance in Regulatory Guide 244 Giving information, general advice and scaled advice.
Section 912A of the Corporations Act 2001 sets out the general obligations of Australian Financial Services Licensees.
Section 911A of the Corporations Act 2001 requires any person carrying on a financial services business in Australia and providing financial product advice to hold an AFS licence or be a representative of an AFS licensee. ASIC contends that the conduct that is the subject of this action required Yes FS to have an AFS licence or be an authorised representative of an AFS licensee.