The regulator found that Matthew Wallis and Rochelle Manoharan, directors of RI Advice-licensed Found Financial Services, had submitted insurance applications to Zurich that were not requested by clients, were made without permission and contained false information.
The falsified applications were made to “maximise the amount of up-front commission received by Found Financial”, according to a statement from ASIC.
“The false insurance applications were for life insurance, TPD insurance, trauma and income protection insurance,” the statement said.
“Found Financial paid the monthly premiums for a short period of time to give the appearance that the policies were genuine. In each case the policies lapsed because of non-payment.”
ASIC deputy chair Peter Kell said the regulator will continue to take action against advisers who do not act in their clients’ interests.
“People working in the financial services industry must be trusted to act with integrity. If they engage in dishonest conduct, ASIC will remove them from the industry,” he said.
ANZ agreed in October to sell its aligned dealer groups (including RI Advice) to IOOF as part of a move to “create a simpler, better balanced bank”.
Frankly I hope those involved in this sort of behaviour go to jail. But does anyone think it is ironic that industry funds get away with similar behaviour when they sign up their members to life insurance policies without their permission? At least these ANZ-aligned advisers had the decency to pay for the premiums themselves rather than gouging their unsuspecting clients!
Absolutely not. There is already enough burdensome compliance bureaucracy making it more difficult and more expensive for consumers to get good financial advice and products. This was an isolated incident which was uncovered anyway. As others have noted, it would be very difficult for anyone to profit from this arrangement due to the clawback provisions.
Looking like a wonderful $975m purchase by IOOF…
I wonder how many more skeletons may come out of the closet before the IOOF purchase is completed…..
Its hard to understand why? A lapse will reclaim commission. Unless they were exiting that group or the industry?
At a guess, there might have been another volume base incentive at play here. [i]”20 applications a month gets you an additional 5% upfront commission…”[/i]
Yes, very hard to understand how they expected to make money out of this. Clawback will surely get them in the end, if not straight away. Perhaps they were on the cusp of a volume bonus of some sort from their dealer or the insurer, and were prepared to make a loss to get their total volume over the line?
anyone thinking that Hybrid Commission is ‘safe’ in a post LIF world needs to take notice….. the argument that LIF was the result of a targetted Witch Hunt is lestened everytime ASIC finds stuff like this. Both sides of government want the Royal Commission to find and remove the blatantly dodgy practices…and no matter how you look at it, the higher the upfront incentive to place business, the more likely it is encourage dodgy practices. Start looking at Level Comms or FFA now, because I can’t see the Dodgy’s easing up anytime soon until the incentive for being dodge is removed.
right on crawf. the system is set up for rorting. change the system asap. punters need not complain (except about the crap that needs to go into a soa – change that as well).
Whilst the volume of business might make it difficult to do perhaps insurance companies should have someone dedicated to run personal verification checks on applicants to ensure that policy applications are genuine.