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Tougher ASIC penalties called for

The three-year ban issued by the corporate regulator to a former advice group chief found guilty of misleading product advice was too lenient, a number of ifa readers have argued.

On Friday 7 June, it emerged that Murray John Priestley, former chief executive of now-defunct Queensland-based company the Lifestyle Group – the parent entity of former AFSL holder Lifestyle Investor Services (LIS) – was banned by the Australian Securities and Investments Commission (ASIC) for a period of three years after an investigation found evidence of misleading product advice.

The ASIC investigation found Mr Priestley had guaranteed clients profits in excess of 5 per cent per month for use of the ‘Elite Investor’ product, when “he had no reasonable grounds for making the representation”, and had also provided misleading information around his licensing arrangements.

A number of respondents reacted strongly to the news, with many voicing the opinion that the sentence was too lenient and not proportionate to the acts.

“Banning someone for three years is no punishment,” said investment analyst Dale Gillham of Wealth Within.

“Paying back all the money to the people that bought their product based on the misleading representation is more in line, and yes, jail for a few years might be appropriate.

“ASIC will not be able to stop these people until they get tough, as they know all they get is a slap on the wrist.”

Another commenter lamented the “abysmally inadequate punishment”, adding that “given the atrocious behaviour… nothing less than life would be appropriate”.

“Banned for three years from doing what he should not have been doing for the last three years. Ouch,” said another sarcastically.

Yet another respondent raised the issue of the impact of ASIC bans on rising professional indemnity insurance premiums.

The AFS licence of LIS was suspended in February 2012 and cancelled in July 2012.