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19-297MR ASIC takes civil penalty action against RI Advice and former Melbourne financial adviser, John Doyle: Royal Commission case study
ASIC commenced court action in the Federal Court today against RI Advice Group Pty Ltd (RI Advice) and a former financial adviser, John Doyle. RI Advice was, until its recent acquisition by IOOF, an ANZ financial advice business.
ASIC is alleging that RI Advice failed to take reasonable steps to ensure that Mr Doyle provided appropriate advice, acted in clients’ best interests and put his clients’ interests ahead of his own, as required by law. Mr Doyle was an authorised representative of RI Advice between May 2013 and June 2016.
ASIC is also taking action against Mr Doyle, alleging that he gave inappropriate “cookie cutter” advice to retail clients to invest in complex structured financial products called Macquarie Flexi 100 Trust and Instreet Masti 36 and 38, without taking into account their financial goals or risk tolerance.
The impacted clients were, in some cases, preparing for retirement. ASIC alleges that Mr Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products.
ASIC alleges RI Advice knew, or should have known, that there was substantial risk Mr Doyle was not complying with his obligations under the law and was repeatedly recommending structured products to his clients, bypassing compliance processes. ASIC further alleges RI Advice did not take reasonable steps in response.
ASIC also claims RI Advice contravened general obligations as an Australian Financial Services Licence holder and is seeking compliance orders from the Federal Court to prevent similar contraventions occurring in the future.
The maximum civil penalty for contraventions alleged against RI Advice is $1 million per contravention. For Mr Doyle, the maximum civil penalty is $200,000 per contravention.
The conduct of both RI Advice and Mr Doyle was examined as a case study on ‘Bad Advice’ as part of the Financial Services Royal Commission (Interim Report, 4.2.1 Mr Doyle).
This matter has been listed for a first case management hearing before Justice Moshinsky at 9:30 am on 6 December 2019 in Melbourne at the Federal Court of Australia.
Editor's note 2:
Orders were made on 5 December 2019 setting down a timetable for the progression of the matter. The next case management hearing is listed in the Federal Court on 27 March 2020.
Editor's note 3:
This media release was updated on 17 January 2020 to include ASIC's Statement of Claim.
Editor’s note 4:
Orders were made on 27 March 2020 setting down a timetable for the progression of the matter, including that a hearing of liability issues take place on a date after 1 December 2020.
The Court also ordered the parties to complete a number of steps towards the liability hearing, including the filing and service of: a response to the request for particulars from ASIC’s Statement of Claim; any affidavits of lay witnesses; and any expert evidence.
A further case management hearing will take place on a date after 15 September 2020.
The Court also ordered that, at the close of ASIC’s case, Mr Doyle notify the Court whether he wishes to lead evidence in his defence and take all necessary steps to do so.
Editor's note 5:
The trial of these proceedings is set down for hearing on 1 March 2021.
Editor's note 6:
A case management hearing is set down for 13 November 2020.