Ian John Weaver was sentenced in the Southport District Court on 13 March, having pleaded guilty to three counts of “failing to have a reasonable basis for the advice” he gave to clients and one count of making a false or misleading statement.
Between January 2003 and June 2010, Mr Weaver was an authorised representative of Enhance Capital and the Salisbury Group – which was acquired by AFS in 2007.
In sentencing Mr Weaver, Judge Wall QC said the former adviser had prioritised his own interests over those of his clients.
In a statement, ASIC deputy chair Peter Kell said the strategy underlying Mr Weaver’s advice was inappropriate.
“Mr Weaver’s high risk strategy of recommending double gearing strategies to his clients, the majority who were approaching retirement age, was completely at odds with the provision of appropriate financial advice,” he said.
Mr Weaver was banned from providing financial services for a period of five years in 2011.
ifa sister title InvestorDaily first reported that AFS was facing insolvency in March 2013, before administrators were appointed to the dealer group in April of that year.
Just as well he held a proper authority at the time because if he had not have, he wouldn’t have been sent to jail. ASIC would have posted a stern warning not to deal with a unlicensed adviser. Seriously, poor advice leading to a jail sentence? Bikies and drug dealers are treated more leniently
The legal maxim “buyer beware” does not apply to financial services. Even if the client is fully informed of the advice and the risks, there is still an obligation to give “appropriate” advice. What is appropriate is dependant on the client’s circumstances. If you recommend $500,000 of life & TPD and can’t justify why that is a sufficient level of cover then how is that appropriate? if you can justify the level in light of the clients circumstances then you will have a reasonable basis of advice. It’s hardly rocket science…..
And yet to the best of my knowledge, Cassimatis and his Storm cronies remain free, with a number still providing advice through various dealer groups…
I don’t advocate double gearing and if Weaver was as bad as he sounds, then good on ASIC for banning him etc, however I wonder on the scale of things how big a fish Weaver was, and can’t help but wonder if he was simply an easier target…
If an investor enters a high risk strategy knowing full well the odds and the strategy fails, then he will have no one to blame.
On the other hand, if he has an advisor and the advisor fails to mention the risk involved or misleads him as to the risk involved, then the advisor must shoulder the blame.
Well I guess thats the precedent ASIC need in order to jail any adviser who is found guilty of not having a reasonable basis for the advice they provide. How longs a piece of string here? If an adviser recommends $500k of life & TPD cover instead of $750,000 then ASIC can also find him guilty of not having a reasonable basis for that advice either. Dont get me wrong, I think double gearing strategies are outrageous but its the precedent thats now in place that concerns me the most.