After being burned by a rogue corporate authorised representative and entering into an EU with the Australian Securities and Investments Commission (ASIC), Spring Financial Group’s advice to other licensees is to “trust no one”.
Spring FG entered into an EU (enforceable undertaking) with the corporate regulator after an investigation found concerns related to its monitoring and supervision processes.
The Sydney-based practice authorised Brisbane-based Royale Capital to issue general product advice about self-managed superannuation funds (SMSFs) on 24 October 2011.
But unbeknownst to Spring FG, Royale Capital was cold-calling investors, advising them to set up SMSFs and inducing them to make specific investments.
Spring FG became aware of an ASIC investigation into Royale Capital and its related entities in July 2012, and subsequently ended its relationship with the Brisbane firm.
Spring FG managing director Keith Cullen told ifa the lesson for other licensees was to “trust no one other than people that you can supervise every day”.
“You’ve only got to look at the WealthSure scenario in that regard and others before them. It’s fraught with danger, apparently, having these guys [operating under your licence],” he said.
Mr Cullen admitted that appointing a corporate authorised representative was outside of his firm’s business model – and he said “it certainly will never be part of our business model again”.
“I don’t know how licensees with hundreds of authorised representatives sleep at night when they’re all out running their own show,” said Mr Cullen.
Spring FG is planning to sue Royale Capital for misleading and deceptive conduct under the Competition and Consumer Act 2010 (formerly the Trade Practices Act).
The professional body for the stockbroking and financial advice industry has called on the government to “urgently” review the ASIC levy model. ...
The Association of Financial Advisers (AFA) has confirmed the appointment of a new chief executive. ...
FPA chief executive Dante De Gori has announced he will step down from his role at the end of 2021. ...