ASIC has cancelled the Australian financial services (AFS) licence of National Advice Solutions and has banned two Gold Coast-based responsible managers, Gail Glasby and Paul Carcallas, from providing financial services for a period of 10 years.
In a statement on Friday, ASIC said National Advice Solutions failed to ensure that financial services covered by the licence were provided efficiently, honestly and fairly.
According to the regulator, National Advice Solutions adopted a “layered advice” strategy whereby the licensee separated the advice into pre-determined topics, regardless of the client’s personal circumstances, goals or advice needs. The “layered advice” strategy was found to actively impede financial advisers from complying with the financial services laws, as clients were provided with expensive and templated advice that was not appropriate for their personal circumstances.
“Under the strategy, clients would generally receive advice about their superannuation first, which scoped out insurance even where the client was paying their insurance premiums from their existing superannuation account,” the regulator said.
“ASIC found that in these circumstances, it was inappropriate to separate out the superannuation and insurance advice as the products are so intrinsically linked that advice regarding the two topics cannot appropriately be delivered in isolation.”
Additionally, ASIC found that National Advice Solutions also failed to adequately monitor and supervise its authorised representatives and maintain competence to provide the financial services covered by its licence.
Ms Glasby and Mr Carcallas were members of the Compliance Committee and the responsible managers of the AFS licence. Mr Carcallas also performed an audit function.
“A responsible manager is expected to assess strategies and policies used within the business, and ensure that they are consistent with the obligations of the licensee,” ASIC said.
It found that Ms Glasby and Mr Carcallas bear part of the responsibility for the systemic failings that arose from the use of the “layered advice” strategy.
The regulator explained that Mr Carcallas also provided financial advice to clients. In a sample of advice provided by Mr Carcallas, ASIC found that he did not act in the best interests of clients, the advice was not appropriate, and he prioritised his interests (or that of the AFS Licensee) over the interests of the client.
As Mr Carcallas provided advice in accordance with the “layered advice” strategy, the advice was templated, and inappropriately scoped, and he failed to identify or consider the relevant circumstances of the clients when preparing the advice — including when recommending the client participate in an ongoing advice arrangement.
Further, ASIC found that the statements of advice provided by Mr Carcallas were defective, containing projections not based on recommendations provided and failing to include all costs associated with implementing the recommendations.
“ASIC found that these projections were included to persuade the clients to proceed with the advice. The omission of these costs may have led clients to believe that they would have more funds available in retirement than they could realistically expect,” the regulator explained.
It concluded that the banning of Ms Glasby and Mr Carcallas and the cancellation of National Advice Solutions’ AFS licence are part of ASIC’s ongoing efforts to “improve standards” across the financial advice industry.
About time, took ASIC 2 years (too late)
Lol! Sounds like about 95% of self-licensed and boutique financial planning firms (or accountancy firms with a financial advice arm). Underfunded, under-resourced, under-capitalised and very little idea of their regulatory obligations.
All very valid, of course, but it’s interesting how ASIC doesn’t apply this standard to the ATO, when it indiscriminately cancels insurance coverage of super funds members, when their funds are automatically transferred to the ATO holding account.