The relevant provider gave advice in June 2023 recommending a client rollover $2M from an untaxed State superannuation scheme. When giving the advice, the relevant provider failed to take into account or disclose that the $2M exceeded the untaxed cap rollover limit of $1,650,000, that the client had also previously used a portion of this limit and that tax would be payable at a rate of 47% on amounts exceeding the cap. As a result of accepting the advice, the client paid tax of $201,365 from exceeding the cap. The Sitting Panel believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) specifically they did not demonstrate compliance with Code of Ethics’ value of diligence and Standard 5.

The relevant provider gave advice in January 2023 recommending a client make a superannuation non-concessional contribution of $329,000 in the 2022/2023 financial year when the client’s non-concessional cap for that year was $220,000. When giving the advice, the relevant provider failed to obtain or take into account the client’s superannuation assets in the client’s PSS pension fund. As a result, the client needed to withdraw $120,735 from their superannuation and pay tax on the associated earning of $13,570.

The Sitting Panel believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) specifically they did not demonstrate compliance with Code of Ethics’ value of diligence and Standard 5.

The relevant provider gave advice to a client in March 2022 that included a recommendation to make a tax-deductible contribution to superannuation to reduce the tax liability from expected capital gains from the planned sale of an investment property. The relevant provider was advised of the sale of the property in July 2022 and in August 2022 the relevant provider confirmed the contribution could be made. However, the contract of sale for the property was signed in the 2021/22 financial year and the client did not have taxable income in the 2022/23 financial year to get the benefit of the tax deduction.

The relevant provider did not explain to the client that the capital gains tax liability arises when the contract of sale is signed or take steps to confirm when the contract was signed before implementing the advice. The Sitting Panel believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) specifically they did not demonstrate compliance with Code of Ethics’ values of diligence and competence and Standard 5.

The Sitting Panel has made a registration suspension order under s921L(1)(b) of the Corporations Act 2001 suspending Mr Ian Reid’s registration as a relevant provider for three months from 21 November 2024 because the Sitting Panel reasonably believes that Mr Reid has contravened the following financial services laws: s946A(1), s961B(1), s961G and s921E(3).

The order was made in relation to records of advice (ROA) given to three clients in reliance on statements of advice (SOA) that had been given to the clients between five and seven years prior.

All three clients had the same investment risk profile and the same superannuation platform and investments, which they were advised to retain.

The Sitting Panel decided to make the registration suspension order because it was reasonably satisfied that the further advice exemption from giving an SOA in regulation 7.7.10AE of the Corporations Regulations 2001 did not apply to two of the three clients because there had been changes in those clients’ relevant personal circumstances which were significantly different from that in relation to the previous advice.

In addition, the Sitting Panel was reasonably satisfied that in relation to all three clients, the s961B and s961G obligations were not complied with. This was because there was not sufficient evidence on the client files: that reasonable enquiries were made about the clients’ relevant circumstances; that of the enquiries that were made, the results of those enquiries were taken into consideration and advice scoped appropriately; that the clients’ strategic advice needs were taken into consideration; demonstrating why the previous recommendations in the SOA remained appropriate; and that the relevant provider based all judgements in advising the client on that client’s relevant circumstances.

Ultimately, record keeping on all three client files was poor. Details of advice processes, if undertaken, could not be substantiated.

The Sitting Panel found that the relevant provider failed to demonstrate the Code of Ethics’ values of competence, fairness and diligence and breached Standards 1, 2, 5, 6 and 8.

The sitting panel decided not to take action against the relevant provider.

The matter was referred to the Sitting Panel due to concerns that the relevant provider had failed to comply with their continuing professional development requirements (CPD)  (i.e. complete 40 hours of CPD in the relevant areas during the year).  The relevant provider gave the sitting panel information and material which satisfied the sitting panel that there were exceptional circumstances that led to the noncompliance, and that the relevant provider understood their CPD obligations.

The Sitting Panel has decided not to take any action against the relevant provider. The matter was referred to the Sitting Panel due to concerns that the relevant provider contravened sections 946B, 961B(1) and 921E(3) of the Corporations Act 2001 in relation to personal advice given to two retail clients in September 2022. The Sitting Panel considered submissions from the relevant provider and decided to not to take any action.

The Sitting Panel has issued a warning under s921T(1)(b) of the Corporations Act 2001 to the relevant provider because the relevant provider contravened s946A(1) of the Corporations Act by failing to give a Statement of Advice to a client. The circumstances of the contravention were that between February 2022 and November 2022, the relevant provider gave Records of Advice to clients in reliance on Statements of Advice that had been given to the clients by a different providing entity. 

The Sitting Panel determined that it reasonably believed that in giving advice to two retail clients, the relevant provider failed to accurately identify the clients’ goals, failed to make reasonable inquiries to obtain complete and accurate health information for one client, failed to consider the insurance information in relation to one client, and failed to consider the risk profiles of the clients, and therefore the relevant provider contravened s961B of the Corporations Act.

The Sitting Panel determined that it was reasonably satisfied that it was not reasonable to conclude that the advice provided was appropriate for the clients because the SOAs did not address all of the goals the clients had identified and did not ensure that the clients kept their existing insurance until their new insurance was in place.  The Sitting Panel therefore reasonably believed that the relevant provider had contravened s961G of the Corporations Act.

The Sitting Panel determined that it reasonably believed that the relevant provider failed to ensure that the SOAs they provided set out the potential benefits, pecuniary or otherwise, that may be lost by implementing the advice, and out any significant consequences of implementing the advice, therefore contravening s947D of the Corporations Act. 

The Sitting Panel determined that it reasonably believed that in circumstances where the provider had failed to consider the clients retaining their existing insurance cover, he preferred his and his associates own interest in generating commissions over the clients’ interests in maintaining their insurance cover and keeping their costs low.

The Sitting Panel reasonably believed that in giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ values of competence, fairness and diligence and breached Standards 3 and 5 of the Code of Ethics.

The Sitting Panel determined that it reasonably believed that the relevant provider contravened sections 1041H and 921E(3) of the Corporations Act 2001 in relation to personal advice given to a retail client between June 2022 and October 2022 inclusive. The relevant provider was responsible for the backdating of some documents on a client file, including a Statement of Advice. Consequently, the relevant provider failed to demonstrate the Code of Ethics’ values of diligence and trustworthiness and breached its Standards 1, 2, 4, 5 and 8.

The Sitting Panel has issued a written direction under s921L(a)(a)(iii) of the Corporations Act 2001 to the relevant provider in relation to three SOAs. In relation to the first SOA, the relevant provider contravened s961B(1) and s961G by recommending that the client make a voluntary contribution to their superannuation fund to obtain a personal tax deduction when the superannuation fund did not allow voluntary contributions.
 
In relation to the second SOA for a married couple nearing retirement, the relevant provider contravened s961B(1) and s961G in relation to their insurance recommendations by failing to consider the insurance options available in one of the client’s superannuation funds, and by failing to address the conflict between their retirement goals and their financial protection goals. The relevant provider also underestimated the costs of the insurance in the SOA’s retirement projections by $74,479 for one client and $14,566 for the other client. The relevant provider further contravened s961J because in spite of the advice not being in the clients’ best interests or appropriate, the insurance recommendation earned an upfront commission of $20,000, and an ongoing commission of $6,700.

In relation to the third SOA for a married couple with a very low combined income and superannuation balance, the relevant provider contravened s961B(1) in relation to their superannuation and insurance recommendations by failing to ascertain the details of one of the client’s superannuation funds, and by failing to consider the insurance options in both of their existing superannuation funds. The relevant provider also failed to refer to the 50% to 75% loading that would apply to the insurance recommendations for one of the clients in the SOA, and failed to address the effect this would have on their superannuation balance.
 
The Sitting Panel found that as a result of the above contraventions, the relevant provider failed to comply with s921E(3) of the Corporations Act 2001 by failing to comply with the FASEA Code of Ethics, notably Standard 2 and the Value of Diligence.
 
The Sitting Panel’s written direction requires the relevant provider to receive specified supervision, being that they engage an independent compliance professional, at the relevant provider’s own cost, to pre-vet the next 10 SOAs containing insurance advice and the next 10 SOAs that contain superannuation advice that the relevant provider intends to present to a retail client (noting a piece of advice may include both insurance and superannuation recommendations). This means the relevant provider will have a maximum of 20 pieces of advice pre-vetted or a minimum of 10 pieces of advice, if the advice includes both insurance and superannuation recommendations. The relevant provider is then required to provide the independent compliance professional’s findings to ASIC.

The Sitting Panel determined that it reasonably believed that the relevant provider contravened s946A(1) and s921E(3) of the Corporations Act 2001 when they failed to give statements of advice to five retail clients between June 2022 and August 2022. In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ values of competence and diligence and breached Standard 1 of the Code of Ethics.

The Sitting Panel has decided not to take any action against the relevant provider.

The relevant provider gave advice in a Statement of Advice (SOA) to a couple recommending that they rollover their superannuation funds from their existing fund to a new product that would cost a total of $1,960 per annum more.

The matter was referred to the Sitting Panel due to concerns that the relevant provider contravened s961B(1) of the Corporations Act 2001 by failing to demonstrate how the more expensive recommended product, which was described in the SOA as having low fees and being cost effective, would benefit them, and by failing to demonstrate that their existing funds could meet their goal of investing their superannuation in a suitably diversified product that met their investment preferences. As a result, the concern was that the advice was not appropriate in contravention of s961G of the Corporations Act 2001, and that the relevant provider contravened s921E(3) of the Corporations Act 2001 by failing to comply with the Code of Ethics by failing to demonstrate the value of diligence and not complying with standard 5.

Based on the SOA, the Sitting Panel was not satisfied that the relevant provider had contravened the Corporations Act 2001.

The relevant provider gave advice to two clients in relation to insurance and superannuation. The clients were referred to the relevant provider for advice from a third party superannuation switching cold calling operator that made an unsolicited telemarketing call to them offering a superannuation review.

The Sitting Panel determined the advice provided involved contraventions of sections 961B(1), 961G, 961J(1), 921E(3) and 1041E(1) of the Corporations Act 2001. The relevant provider did not adequately consider the clients’ objectives, needs and financial situation or base all judgements on their relevant circumstances. Nor was the advice given to the clients appropriate in the circumstances. For example, the client files did not contain material justifying a) recommendations to switch superannuation funds in circumstances where the client was comfortable with their position and/or would receive small annual savings in product fees while incurring significant additional costs; and b) the assertion that the client was not adequately self-insured.

Further, the client files did not contain evidence that the clients’ circumstances were such that they either wanted or needed ongoing advice to warrant ongoing fees, rather than paying for future services if the need arose.

The relevant provider received soft benefits under a commercial agreement in advising the clients to switch superannuation funds and invest their superannuation funds in the particular product recommended. In the circumstances, the sitting panel was satisfied that the relevant provider prioritised the relevant provider’s own interest over the clients’ interests.

The sitting panel also found that the relevant provider gave the clients misleading information that was likely to induce them to apply for the recommended investment product. The relevant provider included in the Statements of Advice a graph and statement that suggested that the recommended product outperformed other funds for an entire 5 year period when the recommended product had only been in existence for 1 year. There was no evidence that the clients understood the meaning or significance of “back tested results” as used for the recommended product in the graph.

Therefore, in giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ Values of honesty and fairness, and breached Standards 3, 5 and 9 of the Code of Ethics.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant provider engage an independent person with expertise in financial services laws compliance to pre-vet and audit the next 10 SOAs that include a recommendation in relation to insurance; and the next 10 SOAs that include a recommendation in relation to superannuation, that the relevant provider intends to present to a retail client. (NB. an SOA may include a recommendation in relation to both insurance and superannuation.)

The relevant provider is required to provide the independent person’s findings as a result of their audit to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

The Sitting Panel made an order under section 921L(1)(c) of the Corporations Act 2001 (the Act) prohibiting Mr Stephen Rogers’ registration as a relevant provider until after 6 December 2025.

The Sitting Panel considered Mr Rogers’ advice and conduct to one client and found that it was not appropriate for Mr Rogers to scope out of his advice to the client the suitability of establishing an SMSF or the suitability of the SMSF investing into products that were related to Mr Rogers’ licensee.

Mr Rogers’ adoption of the scaled advice approach in relation to the client was not appropriate in circumstances where:

• the referral of the client had not been at arm’s length (as the referrer received a significant referral fee and had introduced the “investment opportunity” to the client),
• the client had been given contradictory information and statements such that a reasonable person would conclude that Mr Rogers was in effect, giving her advice on the areas that were purportedly excluded, and
• the effect of the scaled advice was to exclude critical issues that were relevant to the client’s subject matter.

The Sitting Panel found Mr Rogers contravened:

1. section 961B(1) of the Act because he failed to identify the subject matter (by purporting to limit the scope of his advice), to make adequate enquiries about the client’s needs and objectives; to make reasonable investigation into financial products that might meet the client’s objective, and to base all judgements on the client’s relevant circumstances, which included her risk appetite/profile and her suitability to have an SMSF;
2. section 961G of the Act because the SMSF and investment products were not suitable to the client’s circumstances as the likelihood of achieving the target returns were not sufficiently high to outweigh the upfront costs to the client as the investments were highly speculative, were in a higher risk band than her stated risk appetite and made up 92% of her SMSF balance;
3. section 961J(1) of the Act because Mr Rogers ought reasonably to have known there was a conflict between the client’s interests and the interests of Mr Rogers, his licensee and the referrer of the client and he failed to prioritise the client’s interests;
4. section 1041H(1) of the Act because Mr Rogers engaged in conduct that either was misleading or deceptive, or was likely to mislead or deceive firstly, in adopting the scaled advice model when it was inappropriate in the circumstances and secondly, in using a rate of return in the benefit comparison that was inappropriate in the circumstances; and
5. section 921E(3) of the Act because his conduct demonstrated a failure of the Code of Ethics’ Values of honesty and fairness and a breach of its Standards 1, 3, 5 and 9.

The Sitting Panel has decided not to take any action against the relevant provider.

The relevant provider was authorised by a superannuation fund to give advice to fund members about the fund, and gave advice to two fund members in their 60s who wanted to improve their superannuation balances by increasing their voluntary contributions and updating their investment strategy from balanced to aggressive. The matter was referred to the Sitting Panel due to concerns that the relevant provider contravened s961B(1) of the Corporations Act 2001 by failing to identify that the clients required retirement planning advice, by failing to make reasonable enquiries about their cashflow, and by failing to determine whether an aggressive investment strategy was appropriate. As a result, it appeared that the advice was not appropriate in contravention of s961G of the Corporations Act 2001.

While the Sitting Panel considers the relevant provider could have done more in some areas, it did not believe the failures warranted action such as a warning or reprimand.

The relevant provider contravened s961B(1), s961G and s921E(3) of the Corporations Act 2001 in relation to cashflow, superannuation and insurance advice given to a client in an SOA. The relevant provider also contravened s961B(1), s961G, s1041E(1) and s921E(3) of the Corporations Act 2001 in relation to cashflow, investment, superannuation and insurance advice given to another client in an SOA.

In the first SOA, the relevant provider failed to identify that the client sought debt recycling and estate planning advice, and failed to make reasonable enquiries to obtain complete and accurate information about the client’s business and an existing investment. As a result, the advice was not appropriate, and the relevant provider breached Standard 2 of the Code of Ethics and did not demonstrate the Value of competence. In the second SOA, the relevant provider failed to correctly identify the client’s risk profile, and recommended that the client switch an investment in an existing product to a new product on the basis of a false or misleading statement about the existing product. As a result, the advice was not appropriate, and the relevant provider breached Standard 2 and Standard 9 of the Code of Ethics and did not demonstrate the Value of competence.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant person engage an independent person with expertise in financial services laws compliance to pre-vet the next 10 SOAs the relevant provider intends to present to a retail client. The relevant provider is required to provide the independent person’s findings as a result of their audits to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

The relevant provider gave Statements of Advice (SOA) to three clients (on the same day) which the Sitting Panel determined involved contraventions of sections 961B(1), 961G, 947D(2) and 921E(3) of the Corporations Act 2001. The relevant provider adopted the layered advice strategy for each of the three clients, in circumstances where it was not appropriate to do so. It was not clear as to how the limited insurance advice scope was effective in each client’s circumstances without a contemporaneous assessment of their superannuation. The relevant provider did not adequately consider the three clients’ objectives, needs and financial situation or base all judgements on their relevant circumstances. For example the client files showed the collection of minimal information about their debts and expenses and they lacked explanation as to the bases for the insurance covers recommended. The relevant provider relied on generic, unsubstantiated reasons to support the recommendations for the replacement insurance products. All three clients appeared to be under-insured as a result of the relevant provider’s recommendations. Further, when previously recommending the three clients rollover their superannuation funds, the SOAs did not include any product replacement information as it related to the clients’ residual superannuation balances e.g. no comparisons of fees or risks, or identification of any benefits lost by closing their existing superannuation accounts. In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ Values of trustworthiness and diligence, and breached Standards 5 and 6 of the Code of Ethics.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant provider engage an independent person with expertise in financial services laws compliance to pre-vet and audit the next 10 SOAs that include a recommendation in relation to insurance; and the next 10 SOAs that include a recommendation in relation to superannuation, that the relevant provider intends to present to a retail client. (NB. an SOA may include a recommendation in relation to both insurance and superannuation.) The relevant provider is required to provide the independent person’s findings as a result of their audit to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

The relevant provider recommended in a Statement of Advice (SOA) that the client, who had been cold-called, switch their superannuation from one fund to another. The Sitting Panel determined that in giving the advice, the relevant provider contravened s961B(1), s961G, s1041E(1) and s921E(3) of the Corporations Act 2001. Although the client held life, TPD and IP insurance in their existing superannuation fund, the relevant provider failed to consider their existing insurance or give insurance advice to the client. The SOA recommended a high growth investment portfolio in the recommended superannuation fund despite the client having a growth risk profile. The SOA also contained retirement projections which had no basis in fact, and which the Sitting Panel is satisfied were used to induce the client into accepting the relevant provider’s recommendation. The Sitting Panel’s findings include that the SOA was presented to the client on the day after the fact find was completed, and on the same day that the client completed a risk profile questionnaire, demonstrating that the relevant provider could not have properly enquired about or considered the client’s needs and objectives. In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ Values of trustworthiness, competence, honesty, fairness and diligence, and breached Standards 2, 5 and 9 of the Code of Ethics.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant person engage an independent person with expertise in financial services laws compliance to pre-vet the next 10 SOAs the relevant provider intends to present to a retail client. The written direction also requires the relevant provider to engage the independent person to select and audit 10 SOAs that the relevant provider presented to retail clients between 1 February 2023 and 30 April 2023. The relevant provider is required to provide the independent person’s findings as a result of their audits to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.