ASIC has revoked the Australian financial services licence (AFSL) of SMS Advising Group Pty Ltd (SMS Advising Group).

SMS Advising Group, which is based in Surry Hills, New South Wales, is a company that specialises in providing financial services advice about superannuation.

ASIC also took action banning the director of SMS Advising Group, Ms Barbara Cavanough, from providing financial services advice for 10 years.

ASIC took action because of serious concerns that SMS Advising Group had failed to comply with its obligations under its AFSL, and that it would be unable to comply with its obligations in the future.

ASIC found that SMS Advising Group:

• failed to provide statements of advice to its clients when providing financial services advice;
• had inadequate compliance procedures;
• had inadequate complaints handling procedures;
• failed to properly deal with conflicts of interest; and
• failed to lodge financial records with ASIC.

ASIC first developed concerns about SMS Advising Group when they were reviewed as part of ASIC’s ‘Super Switching’ campaign.

ASIC was also concerned about Ms Cavanough’s association with two unregistered managed investment schemes, both based in Tasmania, known as the Maypole Secured Income Fund and Willow Court. Several clients of SMS Advising Group invested in these unregistered managed investment schemes after receiving advice from Ms Cavanough.

Ms Cavanough was involved in the operation and promotion of both the Maypole Secure Income Fund and Willow Court. The Maypole Secure Income Fund purchased shares in Maypole Bakery Pty Ltd which is the owner of the Maypole Bakery. At the same time Ms Cavanough’s husband became a director of Maypole Bakery Pty Ltd.

‘ASIC was concerned that these relationships were not properly disclosed to clients of SMS Advising Group. ASIC will take action against financial services providers that do not properly manage conflicts of interest to ensure that they put the interests of their clients above their own’, Ms Jan Redfern, ASIC’s Executive Director of Enforcement said.

‘To make an informed and considered decision about any financial matter, including switching super funds, people need to be provided with the right information and licensees have an obligation to ensure all of the implications of a decision are disclosed’, Ms Redfern said.

Both SMS Advising Group and Ms Cavanough have the right to appeal to the Administrative Appeals Tribunal or other bodies for a review of ASIC’s decision.

Background

ASIC’s ‘Super Switching’ review was conducted in late 2004 and early 2005. The super switching surveillance sought to test the readiness of advisers to give compliant super switching advice ahead of the implementation of the choice of superannuation fund legislation on 1 July 2005.

ASIC issued its report on super switching in August 2005, and also published the ASIC guide, ‘Super switching advice: Questions and answers’.