Mr Orth, who was registered to provide personal financial advice between March 2013 and November 2016, implemented a business model within his practice between May 2013 and December 2016 that provided advice to more than 750 clients, who were then offered a lost superannuation search, ASIC said in a statement.
According to the regulator, the representatives of Real Wealth conducting the lost super search would “make representations to them about the advantages of consolidating their existing superannuation funds into a single superannuation fund, and the returns on that fund” but did not consider the clients’ needs.
“Real Wealth did not take into account the personal circumstances of clients or make reasonable inquiries regarding the clients’ objectives, financial situation or needs,” the statement said.
“Further, Real Wealth did not conduct a reasonable investigation into alternate financial products which might achieve and meet clients’ objectives and needs most – instead often using a single fund that they had a relationship with, Hub24.”
The company provided a ‘general advice’ warning, but didn’t give SOAs for the products recommended, and charged clients 4.4 per cent of their total superannuation balance, ASIC said.
Under the enforcable undertaking, Mr Orth will not provide financial services on his own behalf or that of another person, be a director for a financial services business that owns, or is a corporate authorised representative of, an AFSL, apply for an AFSL, or hold out that he is an AFSL holder, for the next five years.
Mr Orth will also pay $400,000 to Financial Literacy Australia to “support the financial capability of vulnerable people”, the regulator said.
yep, banks get to charge dead people, CBA, NAB, Westpac, all did the same thing, none of them get banned, ASIC only likes to ban the IFAs and screw them over. What the article does not say, is that Real Wealth was proving General Advice, Provided general advice disclaimers, btu ASIC thought it was personal advice, and then prosecuted because they didnt take into consideration people circumstances… which you do not do under general advice!
Hub24 is a platform that can hold single funds. Bad reporting.
What annoys me about this is banks do this. One particular one that I have experienced used the ‘free lost super search’ as marketing for the tellers (yes untrained in anything financial planning). They would firstly have to open the superannuation account (cheap, basic fund offered by the bank to target these people), where they can then do the super search.
OH look at that, you have super available to consolidate. Whilst they didn’t make them consolidate their super they simply ask during the application process whether they want to or not.
My client was an interstate truck driver (nightmare for insurance purposes), who obtained very good insurance cover prior to being employed as a truck driver. The teller consolidated all his accounts – he came to me needing to claim on IP. Of course it was gone!! He didn’t even understand what he was doing by consolidating his accounts, no idea he was no longer covered by any insurance. This teller unwound all the work of a financial planner.
The tellers are rewarded for this behaviour. They have their names on a chart out the back, a leaderbaord as such as to who has sold the most product. They don’t even understand the implications of doing something like this.
I am very interested in the outcome of the royal commission particularly around banks and their ‘targets’ for the staff.
Also, out of interest – this was NOT a big 4 bank!
If you wish to write a truck load of business, the word “discovery” is what is required. The great ones dig and dig, into the clients affairs, and then make a recommendation. ASIC, also require “discovery”.
Isn’t this exactly what industry funds do?
Yes to answer your hypothetical question but ASIC don’t care about what they do so it is ok.
4.4%…flash back Friday!
I guess that BT will also receive a 5 year ban for doing the same thing…
And all ISA funds…
Apparently they’re fine because they don’t pay commission and, in their advertising, they “compare the pair” which, of course, they provide the details in advice documents.
and some AMP AR’s