The corporate regulator commenced proceedings against Financial Circle on 15 December 2017, alleging the business’ conduct was “misleading, deceptive and unconscionable”.
The company holds both an AFSL and an Australian Credit Licence, and is authorised to provide advice on life risk insurance and superannuation products as well as engage in credit activities other than as a provider, ASIC said in a statement.
“Financial Circle offers loans to consumers which ASIC alleges can only be obtained if the consumer agrees to obtain and implement financial advice,” the regulator said.
“The advice recommends purchasing personal insurance products and switching superannuation providers. When consumers implement the advice, significant advice fees are paid to Financial Circle from the consumer’s superannuation and in commissions from the insurers.”
The court found there was “appreciable risk” of future contraventions from the business, and made interim injunction orders that prevent Financial Circle from carrying on as a financial services business, providing product advice, or promoting or offering loans or cash payments.
These orders are in place “until the hearing and the determination of the matter”, ASIC said.
AMENDMENT: This article has been amended to remove the name of a previous employee of Financial Circle.
The offence of Financial Circle is horrendous. In my view all Big Banks & Big Dealer Groups whose arms length operations of Advice Arm & Product Provision as well as Promotions should be banned with immediate effect. Further the treatment dished out to Financial Circle should be given to all those Big Fries. There shouldn’t be “Arms Length” operation humbug when it comes to Financial Advice.
Julian Francis
Julian,
In all seriousness, how do you draw the conclusion in regards to the major players following this announcement. It is a ill informed and baseless conclusion based on the article.
A quick google search shows that your business operations are very similar in offering ( I am not saying execution) to the aforementioned group.
In addition your firm offers Financial Planning and insurance advice as well as SMSF advice, accounting and mortgage broking, about as conflicted and vertically integrated as they come
That’s good old ‘third line forcing’, a breach of the Trade Practices Act. Now that ASIC has that bit between its teeth, when will it investigate bank loan officers who, when approving loans, make vague statements to clients that their “loan case would look stronger if your insurance was with us” Or will ASIC only act if the client complains, as per the ACCC?
Look, I’ve worked in banking, FP both aligned and non aligned employed and self employed and I have never heard a loan officer state or imply that a loan app would look better with an in house insurance solution. It just does not happen.
Bank officers don’t approve loans for a start and the approvers don’t have direct communication with the customer, they are a faceless entity.
Again, another baseless claim on this site bashing the big players, as I stated earlier I have been on both sides of the fence and can categorically state that clients of the major players are far more protected than with a small self licensed independent. Argue that point all you like and I am NOT saying the advice at one is better than the other because it is not. What I am saying is that when something may go wrong then the big guys have better reputational management and resources to correct
Quite frankly that’s rubbish. Almost every time a client rings to advise he is moving his insurance to a bank, I ask what inducement was offered. I will guarantee you that any client that has been coaxed/cajoled/bribed in this manner always tells me that the bank officer ( whatever you call them ) handling the loan application asked where his life insurance and super was held, inferring/implying that the loan “deal” might be just better (reduced fees or interest) if the banks planner could have a look at the client’s existing program . For once I agree with the ISN, that TV advert where a bank ‘” officer”” asks about the clients super is spot on. And every ex-banker mortgage broker confirms it, and the bonus system still exists.
A long time ago a Deputy Commissioner at the ACCC admitted to me that there was a huge problem with the banks and third line forcing, but the ACCC would not act without a written client complaint.
And I suggest you read the CFP v Couper case- that was third line forcing. Mr Couper did not go to the CBA for new insurance.