ASIC ramps up Enforcement for individuals working under AFSL holders

In recent weeks, ASIC has increased enforcement in the financial services sector. More than 3 advisers have been penalised for not meeting their compliance obligations.

These cases show AFS Licensees where ASIC’s enforcement action is focussed and can serve as timely reminders that meeting your compliance obligations cannot be overlooked.

 

Key Takeaways

False and Misleading Conduct

  • AFS Licensees must ensure that all representatives understand the prohibition on false and misleading conduct;
  • Marketing and promotional material should be reviewed regularly to ensure it is compliant;
  • AFS Licensees that provide personal advice to retail clients should ensure all the advice documents provided to clients are reviewed to ensure the advice is in the client’s best interests and is not false or misleading.

 

False and Misleading Conduct

Recently, ASIC cracked down on individuals providing financial services in false or misleading ways. In February 2023, ASIC banned former mortgage broker and property spruiker Christine Childs from providing financial services for eight years. Ms Childs was the former director of Think Money and Think Money Wealth Property. She was found to be carrying on an unlicensed financial services business in recommending clients to buy property through their superannuation. This conduct misled and deceived her clients who reasonably assumed that she was appropriately licenced to give them such advice. As a result, ASIC has banned Ms Childs from providing financial services, controlling an entity that carries on a financial services business, and performing any function involved in carrying on a financial services business.

Similarly, ASIC has banned Douglas Cecil Allen from providing financial services for three years. ASIC found that Mr Allen provided advice that was not in his clients’ best interests, and that he made false or misleading statements. It was found that Mr Allen failed to:

  • make reasonable enquiries to obtain complete and accurate information from clients,
  • reasonably consider a client’s insurance options when recommending a client consolidate their superannuation, and
  • appropriately scope the superannuation advice to include insurance.

 

He also included false and misleading product comparison tables in his statement of advice documents.

Finally, ASIC has permanently banned former insurance broker Justin Hampshire from providing any financial services and being involved in carrying on such a business. ASIC found that between November 2015 and April 2019, Mr Hampshire engaged in dishonest conduct in relation to a financial product or service whilst acting in his capacity as an authorised representative. Mr Hampshire incorrectly directed his clients to pay their insurance premiums into a business account he controlled rather than the entity’s trust account. Mr Hampshire misappropriated $41,000 of four of his clients’ insurance premiums for his own benefit. He is also facing fraud related criminal charges after an investigation by the NSW Police.

Complying with your regulatory obligations is an essential part of providing financial services. If you have questions in relation to your obligations, or the obligations of your representatives, please contact us to ensure you aren’t penalised by ASIC.

 

Further Reading

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