In a brief statement, the Financial Services and Credit Panel (FSCP) said it has provided a “written reprimand” to an adviser anonymised as “Mr W” over advice given in August 2022.
According to the FSCP, 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,” it said.
“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 (CGT) 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 determined that it “believed that the relevant provider contravened sections 961B(1), 961G and 921E(3) [of the Corporations Act] specifically they did not demonstrate compliance with Code of Ethics’ values of diligence and competence and Standard 5”.
Standard 5 of the Code of Ethics details that all advice and financial product recommendations that you give to a client must be in the best interests of the client and appropriate to the client’s individual circumstances. You must be satisfied that the client understands your advice, and the benefits, costs and risks of the financial products that you recommend, and you must have reasonable grounds to be satisfied.
Other than taking no action, a written reprimand is the lowest level of action available to the FSCP.
The reprimand will not be published on the Financial Advisers Register; however it is provided to the adviser’s Australian Financial Services Licensee.
Financial Services Minister Stephen Jones recently announced that the government has reappointed 24 members to the FSCP for a three‑year period beginning on 1 January 2025.
The Australian Securities and Investments Commission (ASIC) is responsible for convening individual panels to consider disciplinary matters. Each panel must consist of a chair (an ASIC staff member) and at least two other members, which ASIC must select from a list of eligible persons appointed by the minister.
“The candidates bring with them a range of knowledge and experience across the fields of business, administration of companies, financial markets, financial products and financial services, law, economics, accounting, taxation and credit activities and credit services,” Jones said.
The NCA (new class of adviser) would not have made such a mistake…!
HAHAHA never!
It should worry all advisers what may be just a mistake, confusion or sometimes things get mixed up; is a breach of the code and a reprimand. I wonder if all other professionals have to be prefect to keep their occupation? Luckly the people on the FSCP and the government are so perfect to inforce our unethical behaviour.
It’s a fair point. Know a guy who had the tip of a surgeon’s scalpel left in his hip during surgery and the surgeon still practices despite ongoing health consequences for patient.
Can’t wait until the New Class of Adviser gets rolling on this stuff over the phone after just having a fast, tracked, quick course in how to give advice!
Super members will expect these people will know the answers when asked.
The vast majority of Industry Super members have little to no idea of the complexities and enormous issues surrounding the Nomination Of Beneficiary, let alone anything else.
These ” new ” advisers will be under pressure to satisfy the member’s enquiry and to retain their business.
That’s how conflicted, vertically integrated advice delivery works !!
That worries me that a financial adviser of all people didn’t know that the tax event is triggered in the fin year the contract of sale was signed. Pretty sure this is fin plan 101.
Could be an oversight
almost as though we should have advisers that have undertaken a few years of formal education, rather than relying on “years of experience”.
Would you know the background of Mr W? If not I hope you become less ‘tribal’ as you mellow. That old adage “All Englishmen are Europeans, but not all Europeans are Englishmen” if you get the drift.
I’d much rather have an adviser with “years of experience” who would have probably been quite used to getting things dated correctly (as a habit) rather than relying on someone who was still being beta tested in the market.
None of us can comment because we’ve only got brief info here. I’d be interested to know whether the advice document that was provided in March 2022 contained information and warnings about the contribution needing to be in the same year the property was sold i.e. contract signed. The client contacted the Adviser in July to say the property had been sold….perhaps the Adviser asked when the contract was signed and was told July but didn’t ask to see a copy of it…..would you all ask to see it or just rely on the client’s word? who knows whether that’s what took place, but mistakes and oversights happen all the time in every occupation, it’s only ours where you get banned or reprimanded for your first and maybe only indiscretion. The existence of this panel is the reason that licensees will never move away from SOA’s or even consider removing all the warnings and educational stuff. You need to cover your arse for every possible eventuality because we’re ultimately going to wear the blame.
Yeah, the only time financial advisers are professionals is when it comes to punishment.
The rest of the time we’re not considered professionals.