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22-012MR RI Advice to pay $6 million penalty, John Doyle to pay $80,000 penalty: Royal Commission case study
The Federal Court has ordered RI Advice Group Pty Ltd to pay a $6 million penalty for failing to take reasonable steps to ensure that its authorised representative, John Doyle, provided appropriate financial advice, acted in his clients’ best interests and put clients’ interests ahead of his own.
Mr Doyle, a former financial adviser and authorised representative of RI Advice, was ordered to pay an $80,000 penalty after he inappropriately advised clients to invest, and stay invested, in complex structured financial products. Mr Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products. Mr Doyle had admitted the allegations against him.
ASIC Deputy Chair Sarah Court said ‘These complex products were not suitable for Mr Doyle’s clients, many of whom were approaching retirement. RI Advice should have been properly monitoring Mr Doyle’s advice to ensure he was complying with the law.
‘The $6 million penalty handed down by the Court against RI Advice sends a strong message to financial services licensees to properly monitor the advice given by their advisers to make sure consumers are protected.’
Justice Moshinsky of the Federal Court found that RI Advice, an Australian financial services licensee, did not have adequate processes to identify when advisers were avoiding internal advice quality checks or were recommending non-approved financial products. Although RI Advice’s conduct was not deliberate and it had paid compensation to Mr Doyle’s clients, the Court said its breaches of the law were serious and sustained and the monitoring flaws should have been apparent to RI Advice.
The Court also found RI Advice failed in their obligations as a financial services licensee.
RI Advice was, until its acquisition by IOOF in 2018, an ANZ financial advice business.
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 civil penalty is another outcome arising from a number of ‘poor financial advice’ cases brought by ASIC.
Mr Doyle was an authorised representative of RI Advice between May 2013 and June 2016 when RI Advice was owned by ANZ Banking Group.
ASIC commenced proceedings against RI Advice and Mr Doyle in October 2019 (19-297MR).
On 2 August 2021, the Federal Court found RI Advice failed to take reasonable steps to ensure that its former financial adviser, John Doyle, provided appropriate advice to clients, acted in the clients’ best interests and put the clients’ interests ahead of his own (21-196MR).