The Australian Securities and Investments Commission (ASIC) has banned Perth financial adviser Jason Sean Atkins from providing financial services for a period of three years.

ASIC found that Mr Atkins provided advice to clients to establish a self-managed superannuation fund (SMSF) and use limited recourse borrowing arrangements to fund the purchase of real property that was in breach of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.

ASIC Commissioner John Price said, ‘Financial advisers must act in the best interests of their clients. ASIC is committed to improving conduct in the wealth management industry and we will act to remove individuals who do not live up to the high standards expected of financial advisers.’

ASIC found that in providing advice Mr Atkins had failed to act in the best interests of four clients. ASIC was not satisfied that Mr Atkins:

• had identified the subject matter of the advice
• conducted a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered as relevant to advice on that subject matter
• understood what was required of him to comply with the best interest duty.

This banning should serve to remind financial advisers of Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175) which includes guidance on complying with the best interest duty and satisfying the 'safe harbour'. In particular ASIC highlights the following elements of the 'safe harbour', which are relevant even when a client expresses a specific preference for a particular strategy or financial product:

• identification of the subject matter of the advice sought by the client (whether explicitly or implicitly), and
• if it would be reasonable to consider recommending a financial product
• conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered relevant to advice on that subject matter, and
• assess the information gathered in the investigation.

ASIC's MoneySmart website has useful information on SMSFs and property.

Mr Atkins has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

Mr Atkins was a former authorised representative of Magnitude Group Pty Ltd (Magnitude), a subsidiary of Westpac Banking Corporation (Westpac) from 11 May 2015 to 11 December 2015. Mr Atkins was appointed by a corporate authorised representative of Magnitude called Wealth Plus Solutions Pty Ltd. Prior to this Mr Atkins was an authorised representative of Genesys Wealth Advisers Limited from 14 June 2013 to 8 May 2015.

The banning of Mr Atkins is part of ASIC's Wealth Management Project. The Wealth Management Project was established in October 2014 to lift the standards of major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP).

ASIC's work in the Wealth Management Project covers a number of areas including:

• working with the largest financial advice firms to address the identification and remediation of non-compliant advice
• seeking regulatory outcomes, where appropriate, against licensees and advisers.

As part of its Wealth Management Project, ASIC has banned 34 advisers from the financial services industry.

Editor's note:

On 20 July 2017 Mr Atkins applied to the Administrative Appeals Tribunal (AAT) for a review of ASIC's decision.