In the first instance, the Panel found the adviser, identified as Mr J, had charged a client ongoing financial advice fees initially under a service agreement without providing the services for which they were being charged, as well as after the service agreement had expired.
On the fee-for-no-service issue, it said some ongoing services were provided and the adviser had made attempts to contact the client in order to deliver on what the client was paying for.
As for the fees paid beyond the term of the service agreement, the Panel was satisfied that the ongoing charges were due to an unintentional administrative error and that it was an “isolated case”, but that there also should have been measures in place to stop this.
“The Sitting Panel considered that while the fees charged following the service agreement ceasing may have been an administrative error, the relevant provider should have systems in place to prevent this error,” it said.
“Further, the client continued to be charged for 17 months until they made a complaint to the Licensee. The relevant provider should have had governance procedures in place to detect the ongoing error.”
With this, the Panel believes Mr J contravened s921E(3) of the Corporations Act 2001 and failed to comply with standards 2 and 7 of the Code of Ethics, with the FSCP delivering a written reprimand over his conduct.
Standard 2 requires advisers to act with integrity and in the best interests of each client, while Standard 7 mandates that advisers obtain free, prior, and informed consent from clients regarding all fees and benefits (monetary or non-monetary) received in connection with acting for them.
Another relevant provider, Ms O, also faced the Panel over concerns that she had breached s921E(3) by charging two clients monthly advice fees without providing the services they had paid for.
After considering the submissions from the relevant provider, the Panel decided not to take any action on the matter.
The Panel has now handed down six decisions so far this year, half of which have been related to fees-for-no-service incidents.
Earlier this month, another adviser – Mr C – was issued a written direction after the FSCP found they had breached standards 2 and 7 in an isolated case of failing to provide services for fees being paid.
Following this decision, he was then required to undertake at least six hours of CPD covering professionalism and ethics in the three months after the direction is made.
